The latest SEC complaint against Binance could point to why former Binance.US CEO Brian Brooks decided to step down in August 2021, just three months after his appointment.
According to a June 5 tweet from cryptocurrency attorney James Murphy, known on Twitter as MetaLawMan, the SEC complaint cites an “anonymous source” who ran Binance.US for a brief period in 2021. The dates correlate to the time that Brooks was CEO of Binance.US.
1/ The SEC complaint against @Binance appears to solve the mystery of why Brian Brooks abruptly resigned as CEO of @BinanceUS in 2021.
CZ allegedly reneged on promises that Brooks would be given autonomy to run independently from @Binance.
— MetaLawMan (@MetaLawMan) June 5, 2023
Brooks, a former top banking regulator, led operations at the crypto exchange after taking over from former CEO Catherine Coley on May 1, 2021. According to comments cited in the lawsuit, Brooks quickly realized that “it wasn’t really He who ran this company.” Recognizing him, he decided to leave and announced his resignation just three months later, on August 7.
However, Patrick Hillman, Director of Communications at Binance, has rebutted Murphy’s speculation, adding that it “could be one person’s narrative” and “may not stand the test of time.”
Cointelegraph has reached out to Binance.US and Brian Brooks for comment but has yet to hear back.
The information comes after the United States Securities and Exchange Commission filed a total of 13 charges against Binance for allegedly failing to register as a securities exchange and operating illegally in the United States.
Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law. https://t.co/E06hVOaYby
—Gary Gensler (@GaryGensler) June 5, 2023
The news wreaked havoc on the price of cryptocurrencies, including Bitcoin (BTC) and ether (ETH), which fell by 5.6% and 4.3% respectively in the last 24 hours, according to data from Cointelegraph Price Index.
Shares of publicly traded US cryptocurrency companies also saw a sharp decline in price, with Coinbase (COIN) plunging 9% during market trading hours on June 5.
Will Coinbase be next?
Mark Palmer, a senior equity research analyst at Berenberg Capital, told Cointelegraph that several of the details disclosed in the lawsuit “echo” those he previously filed against US-based cryptocurrency exchanges Bittrex and Kraken.
As such, Palmer believes that “these cases together represent a preview of the action that is likely to be brought against Coinbase.”
Palmer said Coinbase investors should focus on whether the exchange has the ability to “successfully pivot” its business model and geographic focus if it were forced to “reduce or cease” a large portion of its US operations as result of the application of the SEC.
“We estimate that at least 37% of COIN’s net proceeds would be at risk if the SEC targeted the company’s cryptocurrency staking and trading operations.
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