Former Binance.US Manager Hires Top Lawyer Amid CFTC Investigation

Catherine Coley, former CEO of Binance.US, has asked Sullivan & Cromwell attorney James McDonald to represent her in the CFTC’s lawsuit against Binance.

Coley helped found Binance’s US subsidiary, Binance.US, in 2019, but left two years later.

Coley left Binance.US because of Zhao’s leadership

According to sources close to her departure, the former Wall Street trader left Binance in 2021 for Binance CEO Changpeng Zhao’s leadership of Binance.US.

Once an avid social media poster, Coley has yet to make any public comments since her departure in 2021.

Coley’s legal counsel is a partner at Sullivan & Cromwell, the law firm representing Binance rival FTX in its Delaware bankruptcy proceedings.

Coley’s hiring of McDonald comes after the US Commodity Futures Trading Commission sued the exchange and its CEO for promoting its derivatives trading desk to so-called VIP US trading firms without being registered with the agency. The CFTC also accused the exchange of operating a weak compliance program.

The CFTC began investigating Binance in 2021 for alleged unlawful trading, which later that year morphed into insider trading charges. In the latest lawsuit, the agency claimed that 300 internal accounts are exempt from internal regulations that prohibit insider trading.

Since May 2021, the US Department of Justice has been investigating Binance’s potential tax evasion and KYC/AML compliance. In December, lawyers for the exchange began negotiations with prosecutors who were considering aggressive action against the exchange.

The US Securities and Exchange Commission has also requested information on how Binance.US, a US client-focused spot trading platform, is related to its global subsidiary.

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Corporate actions contradict public claims

The recent CFTC allegations that Binance allegedly exempted 300 accounts from insider trading rules reflect a trend for the exchange to protect its corporate interests while maintaining a benevolent exterior.

After the collapse of FTX, he announced that Binance would launch a $1 billion recovery fund to help struggling crypto firms, stressing that all of the fund’s transactions would be publicly viewable.

However, in a transaction earlier this month, the exchange transferred nearly $1 billion of the fund’s BUSD holdings to a corporate exchange. It didn’t specify how it would convert the funds into bitcoin, ether and BNB after US regulators ordered BUSD issuer Paxos to stop minting the coin.

Transferring Binance Recovery Funds to Corporate Wallet | Source: Etherscan

“We will hold funds available as needed, but they will remain in our corporate wallets and not the IRI wallet,” a spokesman told Fortune.

Additionally, reports surfaced in early January that so-called B-tokens, which are BNB-chain versions of assets deposited by customers, were not backed by sufficient collateral.

Binance had also reportedly mixed client and corporate funds in a single wallet. It later admitted its mistake and said it would only mint B tokens if the customer wallet had the required collateral.

To be[In]Crypto’s latest Bitcoin (BTC) analysis can be found here.


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