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SEC requests to seal Binance lawsuit documents, former SEC official: Justice Department investigation may involve criminal charges

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SEC requests to seal Binance lawsuit documents, former SEC official: Justice Department investigation may involve criminal charges

Former SEC Internet Enforcement Director John Reed Stark pointed out that in his nearly 20 years working in the SEC's enforcement division, he has never seen the SEC file a motion to seal court documents.

Review of SEC's lawsuit against Binance: The U.S. Securities and Exchange Commission (SEC) has accused Binance Holdings and Changpeng Zhao of violating securities laws, BNB falls below recent lows, CZ responds.

SEC Filing Motion to Seal Documents Sparks Speculation

On August 28, the SEC filed a motion to seal document in order to submit sensitive information to the court under seal.

The document covers 37 pieces of evidence, including the proposed orders by the SEC and a statement from SEC attorney Jennifer Farer.

Former SEC Official: Fear of Escalating to Criminal Prosecution

John Reed Stark, who has 20 years of experience at the SEC, shared his speculation on Twitter, suggesting that the SEC may be trying to avoid interfering with a criminal investigation by the Department of Justice into Binance, or simply seeking to protect specific witnesses.

DOJ Conducting Criminal Investigation into Binance?

John Reed Stark referenced reports of the DOJ investigating Binance and the protective measures set up by the DOJ for grand jury proceedings, indicating that the DOJ's investigation may involve money laundering allegations or potential criminal activities related to Binance. The SEC's motion to seal documents may be an attempt to avoid interfering with the DOJ's criminal investigation.

Protecting Witnesses in Legal Cases

Stark pointed out that during investigations, the U.S. Department of Justice may cooperate with informants or whistleblowers, and SEC staff not only need to avoid disrupting the investigation but also protect witnesses from potential risks.

He speculated that Binance may not oppose the SEC's motion to seal, as publicly revealing evidence related to criminal charges could further impact Binance. However, if Binance opposes the SEC's sealing request, it may indicate that the SEC's true purpose is to protect the identity of witnesses while Binance aims to disclose whistleblowers to the world.

Stark reiterated that the SEC's motion to seal documents is highly unusual and rare, noting that in his 20-year career, he does not recall the SEC ever filing a motion to seal:

Regardless of the actual circumstances, the SEC's motion to seal documents is a very unusual, strange, and rare request.