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The US Securities and Exchange Commission (SEC) has sought permission to issue a legal summons to Changpeng Zhao, CEO of the cryptocurrency exchange Binance, using “alternative service”. The regulatory body argues the traditional method of service, which requires the presence and signature of the person being served, may prove difficult in this case. Binance and Zhao were recently sued by the SEC for alleged unregistered securities operations. The SEC has also ordered Zhao and Binance to provide a “sworn accounting” of their financial information. Zhao’s exact whereabouts remain unknown.
This article originally appeared on cointelegraph.com
The Securities and Exchange Commission (SEC) of the United States has been trying to locate Changpeng Zhao, the CEO of the cryptocurrency exchange Binance, for some time now. However, their efforts have been in vain. As a result, the SEC has asked the court to permit “alternative service” to locate and serve Zhao via email or social media.
Binance has become one of the most popular cryptocurrency exchanges globally, handling billions of dollars in daily trading volumes. However, the SEC has been concerned about the legality of some of Binance’s operations. The agency has been investigating into whether Binance has violated U.S. securities laws by allowing American investors to trade on its platform.
According to the SEC’s complaint, “Zhao has acknowledged, via tweets, press interviews, and other public statements, that Binance serves U.S. persons.”
The SEC has been attempting to serve Zhao, who is based in Asia, since June 2021. The agency has sent multiple letters to his known addresses and requested assistance from the FBI. However, the SEC has not been able to locate or contact Zhao.
Thus, the SEC has now asked the court to permit “alternative service,” arguing that it would provide Zhao with proper notice of the lawsuit. Alternative service involves serving the defendant via alternative means, such as email or social media platforms like Twitter or LinkedIn.
The court’s decision on alternative service could set a new precedent for serving legal documents on individuals outside of the U.S. If the court grants the SEC’s request, it would represent a groundbreaking case for the cryptocurrency industry, which is notorious for its complexity and lack of regulation.
Due to the widespread adoption of cryptocurrencies as a means of conducting transactions worldwide, regulators and lawmakers are grappling with how to regulate these platforms effectively. Increased regulations are required to mitigate the risks associated with money laundering, terrorism financing, and other criminal activities.
Binance, which has over 400 employees worldwide, is also facing regulatory scrutiny from other countries. Regulators in Japan, the United Kingdom, Canada, and Thailand have all issued warnings against Binance, stating that it was operating illegally in their respective countries.
In conclusion, the SEC’s inability to locate Changpeng Zhao illustrates the challenges of regulating the cryptocurrency industry, which operates across borders and jurisdictions. However, the SEC’s request for “alternative service” shows its determination to hold accountable those who violate U.S. securities laws, regardless of their location. The court’s decision on the alternative service request will be crucial in determining the future of the legal service of process for individuals located outside the U.S.
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