United States-based crypto exchange Binance.US has reportedly hired a former enforcement official from the Securities and Exchange Commission (SEC) as part of the legal team to defend itself against allegations of operating as an unregistered securities exchange.
According to a June 12 report from Bloomberg, Binance.US has hired former SEC enforcement co-director George Canellos with the international law firm Milbank LLP along with three other lawyers. Canellos left the SEC in 2014 after serving for more than 4 years in different leadership positions.
“Binance is clearly preparing for a criminal prosecution and continuing to hire the best defense attorneys in the world,” said former SEC internet enforcement chief John Reed Stark on Twitter. “Given the gravity of the fraud alleged by the CFTC and SEC (which might also be the tip of the iceberg of any criminal indictment), a DOJ prosecutor would certainly seek prison time for anyone convicted or pleading guilty to Binance-related crimes.”
Canellos’ addition to the Binance.US legal team came amid the U.S. firm facing a lawsuit from the SEC alleging it failed to register an exchange, broker and clearing agency. The SEC made similar allegations against global exchange Binance in the same filing and Coinbase in a subsequent filing, and attempted to freeze the assets of the U.S. exchange through a temporary restraining order.
“If the Court does address the merits of the SEC’s motion, it should deny that motion,” said Binance.US in a June 12 filing on the SEC’s court petition to freeze assets. “The SEC’s proposed remedies would effectively end [Binance.US’] business. The SEC seeks, among many other things, a draconian and unduly burdensome freeze of all the company’s operations without any exceptions.”
Following the SEC’s actions, Binance.US announced on June 9 it would be suspending U.S dollar deposits and potentially pausing fiat withdrawals starting as early as June 13. The exchange cited the SEC’s “extremely aggressive and intimidating tactics” in its reasons for the move.
U.S. lawmakers and industry leaders have criticized the SEC for its seemingly heavy-handed approach to crypto enforcement. On June 12, Representative Warren Davidson called for the firing of SEC chair Gary Gensler through a proposed bill aimed at restructuring the commission.