Binance’s Future Is in Jeopardy, Former SEC Official Says
Former SEC Enforcement Division lawyer John Reed Stark has warned of multiple red flags related to Binance
Binance’s future may be in jeopardy, according to former SEC Enforcement Division lawyer John Reed Stark.
Stark cites several red flags surrounding the cryptocurrency exchange, including a CFTC action alleging regulatory violations, allegations of commingling customer funds, and lack of proof of reserves and audited financials.
Additionally, he expresses concerns over Binance’s so-called auditor quitting and the mystery of the company’s headquarters location.
Stark points out that Binance’s proof-of-reserves audit, which the company previously touted as evidence of financial stability, is not considered reliable by the Public Company Accounting Oversight Board (PCAOB).
He argues that the proof-of-reserves audit is inadequate and that legitimate entities would not accept it as proof of anything. Binance has countered that a traditional audit of its finances remains “way off” due to the accounting profession’s lack of understanding of the crypto ecosystem.
The CFTC enforcement action against Binance is perhaps the most significant red flag, according to Stark. The action alleges that Binance encouraged customers and employees to evade US regulations since at least 2018.
Stark also accuses crypto firms like Binance of “regulatory misappropriation” by hijacking legitimate regulatory labels to create a counterfeit veneer of assurances, integrity, expertise, and regulatory supervision.
Given the numerous red flags and potential for more civil and criminal prosecutions related to Binance, Stark advises those with Binance accounts to exit the platform immediately.
