The recent settlements between Binance and various U.S. federal agencies, including the Department of Justice (DOJ), the Treasury, the Financial Crimes Enforcement Network (FinCEN), and the Commodity Futures Trading Commission (CFTC), have triggered a detailed analysis from John Reed Stark, the former head of internet enforcement at the U.S. Securities and Exchange Commission (SEC). Stark outlined his perspective on why these settlements can be considered a significant victory for the SEC, despite its absence from the joint press conference.

The SEC’s Absence: A Tactical Move
Stark began by emphasizing the SEC’s conspicuous absence from the joint press conference, noting that Chair Gary Gensler was not present. Despite this, Stark contends that the SEC emerged as a substantial winner in the Binance settlements. He suggested that the SEC could leverage the comprehensive inculpatory evidence present in the settlements to strengthen its ongoing lawsuit against Binance and its former CEO, Changpeng Zhao (CZ).

Treasure Trove of Evidence
The former SEC official highlighted that the settlements provide the SEC with a “treasure trove” of new and detailed evidence. Stark believes that the extensive documentation from the DOJ, CFTC, FinCEN, and the Treasury will serve as valuable ammunition for SEC investigators and litigators. These documents, including pleas, consent orders, and attachments, could significantly enhance the SEC’s case against Binance.

Monitorships and Cooperation Requirements
Stark pointed out that the multiple monitorships agreed upon by Binance could present unique opportunities for the SEC’s investigative and litigation teams. These monitorships are expected to yield a continuous stream of newly discovered inculpatory evidence. Additionally, the astonishing level of cooperation pledged by Binance, CZ, and every employee was noted as a leverage point for the SEC during any investigative or discovery disputes.

Filing of Suspicious Activity Reports (SARs)
Binance’s commitment to filing Suspicious Activity Reports (SARs) was deemed significant by Stark. He anticipates that newly filed Binance-related SARs will provide ongoing leads and inculpatory evidence for the SEC. Stark emphasized that such reports would lend factual weight to the SEC’s characterizations of Binance-related conduct as criminal behavior, dispelling notions of hyperbole, rumor, or conjecture.

Strategic Leverage for the SEC
Stark underscored the potential strategic leverage the SEC could gain from Binance’s cooperation requirements. He speculated that Binance and CZ would seek to avoid SEC complaints to FinCEN, DOJ, Treasury, etc., regarding a lack of cooperation, as this could result in additional fines, penalties, and even prison time.

AML-Related Allegations
In conclusion, Stark suggested that the SEC could use the new AML-related facts and allegations to strengthen its case against Binance. This could potentially lead to increased fines, penalties, and disgorgement. He emphasized that these new AML-related elements could complement the existing allegations from the DOJ indictment and FinCEN’s extensive list of AML violations.

Stark’s analysis portrays the SEC as a strategic winner in the aftermath of the Binance settlements, leveraging the wealth of information and commitments made by Binance to bolster its case and potentially secure more favorable outcomes in the ongoing litigation.

It’s important to note that legal proceedings are complex, and outcomes may vary. This analysis is based on Stark’s perspective and should not be considered legal advice.