Weekly Highlights | U.S. SEC Files 13 Charges Against Binance and Changpeng Zhao; Sequoia Capital to Split into Three Companies

Organizer: Biscuit, ChainCatcher

1. The SEC has filed 13 charges against Binance and Changpeng Zhao, including mishandling customer funds

According to The New York Times, the U.S. Securities and Exchange Commission (SEC) has filed 13 charges against Binance and Changpeng Zhao, including mishandling customer funds and misleading regulators and investors about its operations. The SEC stated that Binance has been mixing "billions of dollars" of customer funds and secretly transferring them to an independent company controlled by Zhao. Additionally, Binance misled investors about whether its systems were sufficient to detect and control manipulative trading practices. The SEC also indicated that Binance did not take adequate measures to restrict U.S. investors from using the unregulated exchange.

Zhao immediately tweeted that the Binance team is on standby to ensure the stability of the exchange's systems, including deposits and withdrawals, and will respond to the incident afterward. This afternoon, Zhao launched a Twitter poll asking, "Binance or SEC, who can better protect users?" with Binance receiving approximately 84.7% support.

In terms of data, following the news of the SEC suing Binance, crypto market maker Cumberland withdrew 67.9 million USDC from Circle and deposited 67.1 million USDC into Coinbase. Crypto brokerage FalconX received 37 million USDC from Circle and deposited 29.5 million USDC into Binance, with these two institutions collectively depositing 96.6 million USDC into the trading platform. FBG Capital withdrew 44 million USDT from the exchange before the SEC's lawsuit against Binance and subsequently deposited it back into Binance after the report.

After the incident was reported, data from Nansen showed that Binance experienced a 24-hour outflow of $719 million, with a current stablecoin balance of approximately $8 billion. According to Coinglass data, the total liquidation amount across the network reached $310 million in 24 hours, with long positions accounting for $286 million. (Source link)

2. The SEC requests the court to freeze assets related to Binance US

The SEC has requested the court to approve a temporary restraining order to freeze assets related to Binance US. According to a court document submitted in Washington, the SEC seeks approval to freeze assets related to BAM Management US Holdings and BAM Trading Services, the holding and operating companies of Binance US.

If the restraining order is approved, Binance will have five days to ensure that only Binance US can access customer funds and will need to transfer all customer assets to a new wallet that only Binance US can access within 30 days.

Previous news reported that the SEC sued Binance and its founder Changpeng Zhao, claiming that companies associated with Zhao could secretly access funds belonging to Binance US customers.

Binance US responded that user assets are secure, and the platform will continue to operate fully, with deposit and withdrawal functions normal. Zhao tweeted that the asset freeze would only affect Binance US, and Binance.com would not be impacted. Additionally, on-chain data shows that approximately $4 billion has flowed out of Binance, Coinbase, and Binance US since the SEC's enforcement action. (CoinDesk)

3. Richard Teng: It is too early to talk about "succeeding Changpeng Zhao," and Binance will be built into a compliant new organization

Richard Teng, head of Binance's regional markets, stated in an interview with CoinDesk that it is too early to speculate about him being groomed to "succeed Changpeng Zhao as CEO of Binance." He noted that his new position is not even a promotion but rather an expansion of his responsibilities to help Zhao review certain matters.

Teng pointed out, "If you look back over the past 18 to 24 months, you can see that Binance has made a significant shift towards compliance, but we acknowledge that there have been issues in the past. We hope to address all these policy issues responsibly with all parties and continue to prove that we are a brand new organization."

A former Binance employee who requested anonymity told CoinDesk, "Senior leadership and regulators have been discussing behind closed doors and believe that Richard Teng is the only leader who can succeed Changpeng Zhao and continue to build the company according to Zhao's vision. Teng can also help bridge the existing gap between the industry and regulators."

Notably, Changpeng Zhao publicly stated at the end of July 2021 that the company had developed a succession plan, which was also when Binance re-hired Teng. Teng initially joined Binance as CEO of the Singapore operation and quickly rose through the ranks during the tumultuous period for digital assets.

ChainCatcher previously reported that, according to Bloomberg citing informed sources, if Changpeng Zhao were to leave due to regulatory difficulties, Richard Teng would become the next CEO of Binance. In late May, Zhao appointed Richard Teng as head of all regional markets outside the U.S. According to LinkedIn, Richard Teng is 52 years old, a Singaporean who worked at the Monetary Authority of Singapore for 13 years, served as Chief Regulatory Officer at a Singapore securities trading platform starting in 2007, and later held senior positions in the Abu Dhabi International Free Trade Zone. He joined Binance in May 2021, focusing on supporting Binance's growth in a compliant and sustainable manner. (Source link)

4. Sequoia Capital to split into three companies, with Sequoia China, India, and Southeast Asia rebranded as HongShan and Peak XV Partners

According to TechCrunch, Sequoia Capital will split into three companies, with Sequoia China rebranded as HongShan, and the India and Southeast Asia divisions rebranded as Peak XV Partners. Sequoia's U.S. and European businesses will maintain their affiliation with the original Sequoia Capital brand.

Additionally, Sequoia Capital India and Southeast Asia stated that Peak XV Partners raised $9.2 billion through 13 funds under its previous brand name and will now seek to deploy approximately $2.5 billion raised last year. (Source link)

5. Coinbase has $129 million worth of ETH waiting to be unstaked, accounting for 79% of all withdrawal entities

According to ChainCatcher, as of June 8, the amount of ETH waiting to be unstaked by Coinbase and related entities is 71,296 (approximately $129 million), accounting for over 79% of the total amount waiting to withdraw staked ETH.

Today's news reports that since the SEC took enforcement action against Coinbase on June 6, 35,810 cbETH have been redeemed, worth approximately $65.7 million. Among them, the single-day redemption amount on June 6 was 27,280 cbETH, worth approximately $49.1 million. According to Nansen data, the current amount of cbETH staked in Coinbase is 2.328 million, accounting for 10.3% of the total staked ETH. (Source link)

6. Vitalik: Ethereum needs to undergo three technological transformations and reshape the relationship between users and addresses

Ethereum co-founder Vitalik Buterin stated that the three major technological transformations Ethereum needs to undergo are: transitioning to L2 scaling, with everyone moving to Rollup; transitioning to wallet security, with everyone using smart contract wallets; and transitioning to privacy, ensuring that privacy-preserving fund transfers are feasible and that all other tools being developed are privacy-protecting.

Without L2 scaling, Ethereum's high transaction costs will hinder mass adoption, leading to centralized solutions; without wallet security, users will be reluctant to store funds and non-financial assets, resulting in a shift to centralized trading platforms; and without privacy, the public availability of all transactions will harm user privacy, pushing users toward centralized solutions that offer data protection. These three technological transformations will reshape the relationship between users and addresses, with users having multiple addresses in L2 and facing challenges in maintaining address consistency.

7. Robinhood may delist tokens like SOL and MATIC named as unregistered securities by the SEC

During a hearing held by the U.S. House Agriculture Committee, Robinhood's Chief Legal Compliance Officer Dan Gallagher stated that its platform may delist tokens named as unregistered securities in the SEC's lawsuits against Binance and Coinbase this week, including SOL, MATIC, and ADA. The lack of disclosure standards for these projects' other securities will hinder their relisting. (The Block)

8. He Yi: Binance's listing logic aims to consider the needs of most users, with monitoring of Launchpad project wallets and market maker accounts

Binance co-founder He Yi stated on social media while discussing Binance's listing standards that "Binance's listing is not decided by one person. The listing logic aims to consider the needs of most users; however, rumors and slander spread more easily. We welcome all major influencers to analyze and compare all the projects listed this year."

Additionally, regarding the poor performance of certain tokens after being listed on Binance and the volatility of some small tokens, He Yi stated that Binance monitors the wallets of Launchpad project teams and market maker accounts, and currently requires project tokens to be multi-custodied as part of mutual supervision. (Source link)

9. Grayscale requests the SEC to withdraw its application for the Filecoin trust product

Grayscale has requested the U.S. Securities and Exchange Commission (SEC) to withdraw its application to launch a Filecoin (FIL) trust product. It is reported that in its withdrawal request, Grayscale stated that it still believes FIL is not a security, as outlined in its letter dated June 6, 2023. (Source link)

10. Lens Protocol completes $15 million financing, led by IDEO CoLab Ventures

According to TechCrunch, the decentralized social protocol Lens Protocol has completed a $15 million financing round, led by IDEO CoLab Ventures, with participation from General Catalyst, Varian and Blockchain Capital, Flamingo DAO, DAOJones, Punk DAO, DAO5, Global Coin Research, as well as Uniswap CEO Hayden Adams, OpenSea co-founder Alex Atallah, former Coinbase CTO Balaji Srinivasan, Sandbox co-founder Sébastien Borget, and Polygon co-founder Sandeep Nailwal. (Source link)