The United States District Court in Washington, D.C. has issued a summons for Binance CEO, Changpeng Zhao, also known as CZ. The summons follows closely on the heels of the Securities and Exchange Commission’s (SEC) lawsuit filed against the popular cryptocurrency exchange.
The summons, dated June 7, is a legal notice to CZ, currently believed to reside in the Mediterranean island nation of Malta. It states, “A lawsuit has been filed against you.” At the time of writing, the summons did not appear to have been officially served, and neither the SEC nor Binance has offered any immediate response or additional information.
The CEO isn’t necessarily required to appear in person. However, once the summons is served, CZ and Binance have a legal obligation to respond within 21 days. The document warns, “If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint.”
Charges Stemming from SEC Lawsuit
The SEC lawsuit against Binance was made public on June 5, levying a total of 13 charges against the cryptocurrency exchange. The allegations mostly relate to unregistered sales of Binance’s internal products and services, including its cryptocurrency staking program, and its purported failure to adequately register its primary and U.S. arms as exchanges.In response to the SEC’s action, Binance has disputed the allegations. In a public statement, the company maintained that their business model was fundamentally different from other failed exchanges, referencing the FTX collapse without explicitly naming it. The company said, “We are different than others!
Binance Denies Any Misconduct
Binance has vehemently denied all allegations of misconduct. The company has refuted claims that it “siphoned consumers’ funds” or used them to “collateralize borrowings.” It also rejected the idea that it gave “large donations” to political candidates or made significant “sponsorships” to entertainment and media entities. As the situation unfolds, the global crypto community awaits further clarity from the court proceedings and Binance’s official response to the summons.
Following the SEC complaint, the US District Court summoned Binance CEO, Changpeng Zhao.
The summons has granted Zhao 21 days to respond, with repercussions of judgment by default if he fails to do so.
CZ has acknowledged the news, saying that while he must respond, he does not need to appear in person.
Binance Coin is down almost 8% in the last day and 1% in under one hour after the news broke.
Binance Coin (BNB) is down a staggering 20% since June 4 to the current price of $260.93, representing a 10% downswing since the beginning of the Asian session on June 7. The leg down comes in light of recent developments in the case between Binance and CEO Changpeng Zhao (CZ) versus the US Securities and Exchange Commission (SEC).
BNB price slumps further over US court summons to Binance’s CZ !
Binance Coin (BNB) price has slumped 10% over the news of the US District Court summoning Changpeng Zhao. Moreover, the summons was issued on June 7, granting Zhao 21 days to respond.
CZ has since confirmed that it was standard operating procedure and that he did not have to physically appear. Noteworthy, the court said that it intends to fight the complaint that was issued against it. Moreover, Coinbase issued a similar complaint, except it did not include allegations of customer fund mismanagement.
These all draw from the Monday lawsuit by the US SEC, suing Binance and its CEO over several alleged violations of the country's securities laws. As reported, the exchange committed to fighting "vigorously" to defend itself. While the summons, filed Wednesday in the US District Court for the District of Columbia, may be procedural, it is notable because of where it was delivered — an address for a seaside apartment block in Malta.
