Former SEC Lawyer Raises Concerns Regarding Binance’s Future

  • Stark advised those with Binance accounts to stop using the platform immediately.
  • Binance’s Chief Security Officer Patrick Hillmann responded to Stark, accusing him of providing financial advice without sufficient knowledge of the case.

Former SEC Enforcement Division Lawyer John Reed Stark has accused Binance, the world’s largest cryptocurrency exchange, of various illicit activities, raising questions about the platform’s future. Stark pointed to a number of warning signs relating to the exchange, such as a lawsuit from the Commodity Futures Trading Commission (CFTC) for alleged regulatory infractions, claims of commingling client assets, and a lack of proof of reserves and audited financials.

Stark said that the Public Company Accounting Oversight Board (PCAOB) does not trust Binance’s proof-of-reserves audit, which the business had previously used as proof of financial stability. In his opinion, a respectable organization would not accept the results of the proof-of-reserves audit as proof of anything. He also voiced his dissatisfaction that Binance’s “auditor” has resigned and that the location of the company’s offices is unknown.

Binance has previously said that a typical audit of company accounts is “way off” since accountants have no understanding of the cryptocurrency industry.

According to Stark, the most concerning red flag is the CFTC’s legal action against Binance. The lawsuit claims that since at least 2018, Binance has actively helped consumers and workers circumvent U.S. restrictions. Stark further stated that Binance committed “regulatory misappropriation” by stealing official regulatory logos to provide the appearance of legitimacy, trustworthiness, competence, and oversight that were all false.

Stark warned users with Binance accounts to terminate their accounts immediately due to the platform’s many red flags and the possibility of more civil and criminal proceedings relating to Binance.

In response to Stark’s post, Binance’s Chief Security Officer Patrick Hillmann said that Stark was giving misinformed financial advice to the public. Stark defended himself, claiming that all he was doing was giving his opinion based on his background as a lawyer, professor, and investigator, as well as the findings of numerous investigations and news pieces.

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