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October 4, 2023

Changpeng Zhao summoned in SEC lawsuit by US court

In response to the Securities and Exchange Commission’s (SEC) recent lawsuit accusing Binance of conducting unregistered securities operations, the United States district court in Washington, D.C. wasted no time in issuing a summons for Binance CEO Changpeng Zhao on June 7.

The summons, delivered just two days after the SEC’s legal action, notified Zhao of the lawsuit filed against him and the exchange.

A summons quickly served

While Binance CEO Changpeng Zhao may not be required to make a personal appearance, he is obligated by law to address the summons once it is officially served. According to the document, once the service is completed, Binance and Zhao will have a 21-day period to provide a response. 

The summons, which was first released on Eleanor Terrett’s Twitter, warns that failure to respond within the specified timeframe may result in a default judgment being entered against them, granting the relief requested in the complaint.

As stated in the summons, Binance CEO Changpeng Zhao, also known as CZ, currently resides in Malta, the Mediterranean island nation.

CZ was quick to take to Twitter following this news to remind his followers that this action is “nothing new” and there is “no need to FUD.”

These actions come just days after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance on June 5.

The commission accused Binance of engaging in the offering of unregistered securities. Following closely on the heels of the Binance lawsuit, the SEC also targeted Coinbase, one of the leading cryptocurrency exchanges, on similar grounds.

The commission alleged that certain popular cryptocurrencies offered by Coinbase, including Solana (SOL), Polygon (MATIC), and The Sandbox (SAND), meet the criteria to be classified as securities. The summons being the latest development in this case.

Uniting the community

The recent court order requiring Binance CEO Changpeng Zhao to appear in court is indicative of the growing regulatory scrutiny surrounding the rapidly expanding cryptocurrency industry.

With this development, market participants and observers are closely monitoring Zhao’s response and its potential ramifications for the broader crypto market. 

Although so far, the actions of the SEC against both Binance and Coinbase, have only proven to unite the community closer, with other notable commuity members like Kristen Smith, the CEO of the Blockchain Association, stating that while the SEC’s actions are expected, it’s still unacceptable, alongside many others who share her view.

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