Binance vs. SEC Crypto industry discusses ‘Tai Chi’ vs. ‘Operation Chokepoint 2.0’

The United States Securities and Exchange Commission (SEC) has pressed charges against Binance, its CEO Changpeng “CZ” Zhao, and its U.S.-based exchange entity for violating securities laws. The SEC filed 13 charges against Binance on June 5 in the U.S. District Court for the District of Columbia, alleging that the company misled investors and misused customer funds. The charges included accusations of mishandling customers’ funds and violating U.S. banking regulations, which were flagged in a Reuters report in May. Binance had denied all allegations at the time, calling the report a list of conspiracy theories. According to the regulator, Binance mixed billions of dollars in user assets and secretly moved them to a different firm controlled by CZ. The SEC also alleged that Binance had not done enough to prevent American investors from using its unlicensed exchange. The list of allegations includes Binance and BAM Trading operating unregistered securities exchanges, broker-dealers, and clearing agencies. The SEC lawsuit came within months of another lawsuit filed by the U.S. Commodity Futures Trading Commission (CFTC) in March. The crypto community reacted differently to Binance’s approach, referred to as “Tai Chi,” and the U.S. regulators’ alleged “Operation Chokepoint 2.0.” “Tai Chi” refers to a method of avoiding responsibility, and “Operation Chokepoint 2.0” is the alleged effort by U.S. lawmakers and regulators to stifle the growth of the crypto industry. Some members of Crypto Twitter claimed that the Operation Chokepoint 2.0 theory is just a conspiracy, as the exchange was clearly selling securities.

12. Tai Chi! Binance had a plan called “the Tai Chi Plan” meant to “reveal, retard, and resolve built-up enforcement tensions” in the US. As it became clear its US business was violating laws, CZ wanted to help route VIP US investors offshore to create plausible deniability.

— Compound248 (@compound248) June 5, 2023

The crypto community members believed that the lawsuit against Binance was unusual because the regulator rarely names executives. Therefore, Binance might face a huge settlement at best.

“I’ve never seen the SEC attempt to try a case in the court of public opinion. Usually they wait until after a case is settled to brag.” – A former SEC official who wished to remain anonymous. Do you think the @SECGov is sensationalizing the case before it goes to court?

— Eleanor Terrett (@EleanorTerrett) June 5, 2023

Some people were quick to point out that the charges are only against Binance’s US branch, which handles a small portion of the exchange’s global trading volumes.

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