The former chief of Internet enforcement for the U.S. Securities and Exchange Commission believes that the SEC’s “secret” filing in the Binance case is a “rare” strategy that may be connected to the Department of Justice’s criminal investigation into the cryptocurrency exchange. He emphasized that the move by the securities commission to file a “seal-seeking filing is unusual, odd, and uncommon,” adding that it “cannot be overstated.”

SEC Takes β€˜Rare’ Move in Binance Case

John Reed Stark, a former employee of the Securities and Exchange Commission (SEC), wrote a lengthy post on social media site X on Tuesday to discuss what he dubbed a “secret” SEC file in its legal battle with cryptocurrency exchange Binance. At the moment, Stark serves as president of the cybersecurity company John Reed Stark Consulting. He established the SEC Office of Internet Enforcement and oversaw it for 11 years as its director. He spent 15 years as an SEC enforcement lawyer.

In the Binance case, the securities watchdog submitted “a sealed motion for leave to file documents under seal” late Monday, according to the former SEC official, who noted that a court document filed under seal “allows sensitive or confidential information to be filed with a court but kept off of any public record. Changpeng Zhao (CZ), the CEO of Binance, and 12 other Binance firms were charged by the authorities in June.

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Stark stated:

Any court filing by the SEC under seal is an uncommon occurrence. Contrary to criminal prosecutorial files, SEC motions (and enforcement proceedings) are normally filed openly and are free for anyone to view because the SEC is a civil (not criminal) enforcement body.

According to him, this “rare SEC tactic” was used since the filing contained sensitive material about a current Department of Justice (DOJ) investigation into Binance, which may include the identity of a witness. According to Stark, “the U.S. SEC’s secret and extraordinary court filing, which appears to be highly comprehensive, likely touches upon nonpublic Binance-related money laundering allegations or other potential criminal conduct.”

The former head of the SEC’s Internet enforcement noted that Binance might object to the agency’s request for a seal. However, he emphasized that the significance of the SEC’s decision “cannot be overstated,” adding:

This SEC seal-seeking file is rare, weird, and exceptional in any case.

“In my almost 20 years in the SEC Enforcement Division, including 11 years as chief of the SEC’s Office of Internet Enforcement, our team worked on and led a broad range of SEC investigations that involved parallel U.S. DOJ investigations and lots of litigation, and I can’t recall ever seeking to file a motion or any other court document under seal,” he said.


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