Why Brian Brooks Resigned as the CEO of Binance US in 2021 and How the SEC Is Now Going After Coinbase

As the crypto world collectively stands in awe of the regulatory hammer that just dropped on Binance and Coinbase, clarity is slowly creeping in on the long-term ramifications of the SEC's expansive complaint against some of the world's biggest crypto exchanges. These moves, however, have given rise to as many questions as answers, plunging the future of the crypto sphere into the deep abyss of uncertainty, at least in connection to the world's largest economy.

As we detailed yesterday, the SEC has lobbed 13 charges against Binance and its CEO, Changpeng Zhao (CZ). These include:

• Binance comingled customer funds with those of Merit Peak Limited, a shell company controlled by CZ.
• CZ-controlled Sigma Chain engaged in wash trading on the Binance US platform to create a false impression of heightened liquidity.
• Changpeng Zhao refuses to disclose the location where Binance's headquarter is located.
• The SEC believes that CZ embezzled $62.5 million from Binance between October 2022 and January 2023.
• CZ controlled the bank accounts and finances of the Binance US platform.
• Sigma Chain's operations were run by Binance employees, with the platform's back-office manager retaining signature authority over Sigma's bank accounts.
• CZ transferred $16 million from Merit Peak to BAM Management to capitalize Binance US.
• The platform's OTC business is conducted via Merit Peak.
• com violated US laws by allowing 3,500 "VIP" customers from the US. The platform also helped customers circumvent its own US IP address ban via VPNs. As many as 47,000 US customers are believed to have traded the BNB coin on the Binance.com platform.
• The platform did not require KYC for customers who withdrew less than 2 BTC per day.
• Binance's Chief Compliance Officer is on record for saying: "We are operating a fucking unlicensed securities exchange in the USA, bro."
• CZ retains signature authority over BAM Trading's bank accounts that hold customer funds of the Binance US platform.
• $20 billion have been transferred into Merit Peak's US bank accounts. This sum is believed to include customer funds as well.
• BAM Trading (Binance US) CEO quit upon realizing that it was CZ who, in reality, was in charge of the company.
• The SEC believes that the BNB exchange token, the Binance USD (BUSD) stablecoin, BNB Vault, and the Simple Earn program are forms of unregistered securities.
• The SEC has also declared Solana, ADA, Matic, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI coins as securities.

While examining the SEC's complaint against Binance, two things stand out. First, the apex financial regulator in the US is attempting to bring virtually the entire crypto sphere under its jurisdiction by declaring some of the most popular tokens "unregistered securities."

Second, the mystery of why Brian Brooks abruptly resigned as the CEO of BAM Trading – which is doing business as Binance US – back in 2021. Brooks has said in his testimony:

"I realized, huh, I'm not actually the one running this company, and the mission that I believe I signed up for isn't the mission. And as soon as I realized that, I left."

This testimony might prove very costly for CZ.

For its part, Binance maintains that the SEC's complaint is nothing but an attempt to make headlines:

"It seems based on these developments that the SEC's goal here was never to protect investors; if that were truly the case, the Staff would have thoughtfully engaged with us on the facts and in our efforts to demonstrate the safety and security of the Binance.US platform. The SEC's real intent here, instead, appears to be to make headlines."

Meanwhile, in what appears to be a tit-for-tat move, the SEC has now sued Coinbase for operating an "unregistered national securities exchange, broker, and clearing agency."

Bear in mind that Coinbase sued the SEC in April 2023. In its complaint, Coinbase argued that it had asked the SEC back in July 2022 to "propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods" but has yet to receive a response. Bear in mind that the SEC is mandated to provide such guidance when requested within a "reasonable" time frame.

Finally, an interesting regulatory dichotomy is emerging in the US. While the SEC is going after the crypto industry with a poisoned spear, the CFTC appears to be much more circumspect. In this regard, the CFTC has now approved an application by CBOE to offer margined futures contracts for Bitcoin and Ether, paving the way for spot trading of BTC and ETH under the auspices of the CFTC.

Do note that Bitcoin is down over 1 percent today after the SEC revealed its latest enforcement action against Coinbase. There appears to be some BTFD-type activity taking place at the moment, which is supporting the price of BTC and ETH.

Moreover, judging from the excellent contrarian credentials of Jim Cramer's calls, crypto investors really have nothing to worry about.

About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.

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