John Reed Stark, a former lawyer for the SEC Enforcement Division, has made allegations against Binance, the largest cryptocurrency exchange in the world, stating that it has engaged in illicit activities that raise questions about its future. Stark pointed to warning signs, such as a lawsuit from the CFTC, claims of client asset commingling, and a lack of proof of reserves and audited financials. He also questioned the credibility of Binance’s proof-of-reserves audit and expressed concern that the location of the company’s offices was unknown.
Binance dismissed the need for a typical audit of its accounts, citing the unique nature of the cryptocurrency industry. However, Stark believes that the most significant issue is the CFTC’s legal action against Binance to allegedly help consumers circumvent U.S. restrictions. He also accused the Binance of regulatory misappropriation of falsely using official regulatory logos to create the appearance of legitimacy.
Stark advised Binance users to terminate their accounts immediately because of the platform’s numerous red flags and the potential for more civil and criminal proceedings. Binance’s Chief Security Officer, Patrick Hillmann, dismissed Stark’s allegations and called them misinformed financial advice. However, Stark defended his opinions, stating that they were based on his experiences as a lawyer, professor, and investigator, as well as various investigations and news reports.
