The United States Senators have reportedly called the attention of the Justice Department to a possible falsification of documents by Binance in its recent letter. They claimed the firm may have lied to the policymakers about some of its business records.
According to the reports, two American senators, Elizabeth Warren, and Chris Van Hollen, recently alleged that Binance might have possibly deceived the US policymakers in its recent letter in March. Hence, they urged the Department of Justice to investigate their claim thoroughly.
The recent discoveries in the ongoing lawsuit between Binance and the US Securities and Exchange Commission SEC reportedly spurred the senators’ allegations. The SEC alleged that Binance and its US branch were commingled.
This revelation supported the senators’ suspicion that Binance had lied to them during their first encounter earlier this year.
According to the report, Three US senators, including Elizabeth Warren, suspected that Binance and its American branch, Binance.US, might be engaging in fraudulent activities like evading local regulators, aiding money laundering, and bypassing sanctions.
US Senators Accused Binance Of False Documentation
Hence, they reportedly wrote a letter to Binance and Binance.US CEOs Changpeng Zhao and Brian Shroder, respectively. In the letter, the lawmakers queried the operation of the exchanges and requested a balanced sheet of the firms’ transactions.
After three weeks, Patrick Hillman, the chief strategy officer at Binance, submitted the requested files to the lawmakers. In addition, he sent a 14-page letter explaining the past mistakes and progress in the compliance level of the firm, claiming the firm now has thorough KYC and anti-money laundering systems in place.
However, in light of the new allegation levied against Binance by the SEC, the senators argued that the giant exchange might have misled them by releasing falsified accounts concerning its business transactions and engagement with its local branches, as stated in the letter.
Hence, Warren and Hollen, in their letter, called on United States Attorney General Merrick Garland to take a thorough look at the claims of the exchange.
Meanwhile, Professor Jack Graves of Syracuse University stated in a recent interview that there are two reasons why Binance.US should operate independently from its International Body. One, the difference in regulations per region, and two, liability in case of bankruptcy.
SEC Aims To Attack Binance Via Binance.US
Explaining further, Graves highlighted that if Binance continues to meddle in the affairs of Binance.US, the American regulators can claim the right to sanction the international entity, which they are planning to do currently.
In addition, should Binance.US file for Chapter 11 bankruptcy, it would be a liability for the international Binance body to pay part of its debts since they were commingling funds. However, if Binance.US is operating independently, it would pay the debts alone without any obligation of the global unit to get involved.
Furthermore, Graves highlighted that the corporate veil is essential in protecting parent firms from liabilities and debts that may emanate from their local branches as long as they are truly separated from each other. However, he admitted that there might be exceptions.
Depending on SEC claims, the two entities wrote different replies. Binance claimed it has been striving to cooperate with the regulator since the lawsuit began. While they take the SEC’s accusations seriously, they are not subjected to the regulator’s enforcement actions.
On the other hand, Binance.US claimed that the SEC’s allegations were baseless. The exchange also stated that it is ready to fight and defend itself in the ongoing lawsuit against it.
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