Crypto Court Insights

  • Reports of talks with Binance and DOJ are reaching a resolution.
  • SEC sues Kraken over failure to register as a securities exchange.
Crypto Court
US DOJ and SEC take Binance and Kraken to court.


A Bloomberg report on November 20th revealed that the Department of Justice (DOJ) is in talks with Binance, a cryptocurrency exchange, to reach an agreement that would require the company to pay $4 billion in penalties. Upon payment, the exchange will be permitted to conduct business in the United States while adhering to its regulations. The report suggested that this announcement could be made by the conclusion of November. 

Is Binance Resolving Case with DOJ?

On November 9th, Binance executed a transfer of 3.9 billion USDT from its wallet named "Binance-Cold 2" on Tron to its wallet designated as "Binance 3." Subsequently, 300 million USDT was further transferred to a different wallet, resulting in approximately $3.6 billion remaining in "Binance 3." As per ChainArgos, a blockchain intelligence firm, this transaction ranks as the 8th largest USDT transaction on the Tron blockchain.

Following the report on the negotiations between the exchange and the U.S. Justice Department, various accounts on social media started speculating about the $3.9 billion transfer. Some raised questions about the cryptocurrency funds, inquiring about where the money came from and if it was a form of preparation to pay the fines.

With the timing of the transfer and the Justice Department report being very close to each other, some Twitter users are trying to connect the dots and figure out if there are any connections between the two. BitCrypto Gazette reached out to Binance but did not get an immediate response.

SEC Sues Kraken, Again...

Kraken, a major player in the cryptocurrency exchange industry, has been sued by the U.S. Securities and Exchange Commission for allegedly operating as a securities exchange without proper registration. The lawsuit, filed in a federal court in San Francisco, is part of SEC Chair Gary Gensler's efforts to regulate the cryptocurrency market by asserting that digital assets are subject to federal securities laws as investment contracts.

Kraken plans to protect itself by arguing that the regulation of cryptocurrency exchanges should be determined by Congress. The exchange also criticized the SEC's perspective on digital assets, stating that it is legally incorrect, factually false, and harmful to policy. Kraken also assured its 10 million clients that the lawsuit will not have any impact on them.

The SEC has filed comparable lawsuits against Binance, the world's biggest cryptocurrency exchange, and Coinbase, the largest in the United States, in June. Both companies are fighting against the regulator's allegations. Since 2018, Kraken, operating as Payward Inc and Payward Ventures Inc, has been accused by the SEC of disregarding securities laws that are meant to safeguard investors while earning hundreds of millions of dollars from crypto transactions.

The SEC also alleged that Kraken had insufficient internal controls and poor record keeping, which was evident in the mingling of customer funds with its own and using customer accounts to pay for operational expenses. SEC enforcement chief Gurbir Grewal expressed concern over the business model of Kraken, stating that their failure to register has led to conflicts of interest that jeopardize investors' funds.

He emphasized that Kraken's prioritization of unlawful profits over investor protection is a recurring issue in the industry. In response, Kraken argued that the SEC complaint acknowledged that any alleged "commingling" was simply the use of fees they had already earned. Additionally, the SEC accused Binance of commingling customer funds, which was reported by Reuters. Binance, however, has denied these allegations of commingling.