• US Court summons Changpeng Zhao (CZ) days after SEC filed a lawsuit against Binance. 

• CZ has 21 days to respond to the summon but has shown a willingness to cooperate. 

The US Securities and Exchange Commission has filed 13 charges against Binance and its CEO Changpeng Zhao. In the latest update, the US District Court issued a summon for CZ just two days after filing the lawsuit. The defendants have 21 days to reply to the summon. 

The summon reads:

Within 21 days after service of the summon on you (not counting the day you received it) – or 60 days if you are the United States or a United States agency or an officer or an employee of the United States described in Fed. R. CIV. P12 (a) (2) or (3) – you must serve on the plaintiff an answer to the attached complaint or a motion under rule 12 of Federal Rules of Civil Procedure.

After quickly glancing through the summon letter, there was no indication of being marked as served. Some reporters claim to have contacted Binance and SEC for a response, but an immediate request for information was not returned. A legal expert explains that CZ is not necessarily required to appear before the court, but he is required to respond to the summon in 21 days. 

If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint.

SEC Files Emergency Motion Against Binance

On Tuesday night, an emergency motion was filed by lawyers of the SEC, asking the court to repatriate and freeze U.S. customer assets. This is reportedly meant to prevent some $2.2 billion of U.S. customer assets held by Binance to be illicitly transferred by CZ.

In the main lawsuit, SEC stated that two subsidiaries of Binance – BAM Trading and BAM Management were controlled by CZ, and have made over $420.4 million in profits and venture fundraising. 

It is also reported that CZ’s attorney has said his client is not subjected to US law. According to the SEC, the court has jurisdiction over CZ and Binance based on Federal law and precedent. 

Binance.US has clarified that it maintains control over technology and financial infrastructure. However, SEC claims CZ’s ultimate control puts investors’ assets at risk. 

Given the history of Zhao’s and Binance’s open desire to avoid U.S. regulation and oversight and their surreptitious control over BAM Trading and commingling of and movements of BAM Trading assets through a web of Zhao-controlled entities outside of the United States, there can be no assurance that BAM Trading employees are not influenced by Zhao or Binance today.

It is stated in the filing that the Binance.US platform has been operated by BAM Trading for more than three years. However, formal policies for handling crypto were only implemented last month. 

Other reports have also stated that CZ’s pattern of geographical elusiveness makes it difficult to locate his exact whereabouts. For this reason, federal regulators are asking the court to enable them to serve him by emailing his lawyers. 

Binance has assured that all assets on its affiliated platforms are safe and secure, and would defend against every allegation leveled by the SEC.