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Apple cited violations of its in-app purchase guidelines as the primary reason for the delisting, according to Damus founder William Casarin.

The federal judge presiding over the U.S. Securities and Exchange Commission’s case against Binance, Binance.US and their owner Changpeng ‘CZ’ Zhao denied a request from Binance’s lawyers to rebuke the regulator over language it used in a press release.

Specifically, Binance’s lawyers took issue with language used by the SEC to describe alleged commingling or diversion of customer assets from the trading platforms to investment vehicles that the agency says Zhao controls.

Judge Amy Berman Jackson of the District Court of the District of Columbia denied the motion on Monday, in an early court loss for the embattled international crypto giant.

“While all of the lawyers in this case should adhere to their ethical obligations at all times, it is not apparent that Court intervention to reiterate that point is needed at this time, or that it is necessary or appropriate for the Court to get involved in wordsmithing the parties’ press releases,” Berman Jackson wrote in an order. “Nor is it clear that the agency’s public relations efforts to date will materially affect proceedings in this case.”

SEC press release language at issue

Last week, lawyers for the company asked Berman Jackson to rebuke the SEC over its descriptions of alleged misuse of billions of dollars of customer assets outside of court on the grounds that the press release could prejudice a jury. The language in question was included in a release announcing the emergency agreement reached between the SEC and Binance.US, which goes by the corporate name BAM Trading, intended to keep customer assets safe while allowing the company to continue business operations.

“The SEC’s press release also appears to be designed to introduce unwarranted confusion into the marketplace, which could have the effect of harming BAM customers rather than protecting them,” Binance’s lawyers wrote to the court last week. “It also risks tainting the jury pool with misleading descriptions of the evidence concerning the defendants.”

The filing in question concerned a statement in the release from SEC Enforcement Director Gurbir Grewal, who said that the agreement restricting how Binance.US can move funds was necessary.

“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please, as we have alleged, these prohibitions are essential to protecting investor assets,” he said. “Further, we ensured that U.S. customers will be able to withdraw their assets from the platform while we work to resolve the alleged underlying misconduct and hold Zhao and the Binance entities accountable for their alleged securities law violations.”

Allegations of misuse of customer funds, lying about safeguards

The SEC wants Berman Jackson to ultimately freeze assets for Binance.US, Binance and Zhao, as well as bar them from doing business in the U.S. But the June 17 agreement that the SEC issued a release about only concerns a temporary restraining order on Binance.US, which the SEC said was necessary because a 2022 internal report on the trading platform’s assets provided by a third party firm could not determine whether the U.S. affiliate of Binance held the assets it said it did, or if they were actually held overseas with its corporate parent.

Berman Jackson did not fully agree with the agency in that request, instead urging the markets regulator and Binance.US to reach an agreement on how to maintain safety of customer assets while allowing the company to continue “an ordinary course of business.”

The SEC also alleges that Binance and Binance.US redirected billions in customer funds to investment vehicles controlled by Zhao, with most of the money being used to pay Paxos, the issuer of BUSD. The SEC also claims Zhao bought himself a yacht using commingled funds.

In addition to the 2022 audit, the agency outlined details of bank records it obtained, primarily from Silvergate and Signature Banks, which maintained networks for business-to-business transactions by crypto firms, to back up the allegations.

The allegations parallel similar accusations about fraud and misuse of customer funds in civil, criminal and bankruptcy cases involving FTX, Alameda Research, and Sam Bankman-Fried.

Berman Jackson set a Sept. 21 due date for Binance’s pleadings in the civil case.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

BTC has gained at least 20% in July in each of the past three years. Depending on its price heading into the expiry, bitcoin could rally additionally or retreat.

The judge’s order comes several months after a jury found the NFT collection’s maker infringed on Hermes’ intellectual property.

Former FTX CEO Sam Bankman-Fried spent millions of commingled customer funds on multiple million dollar luxury properties in the Bahamas for employees and their friends and families, according to the latest investigative report released by debtors on Monday. 

Over $243 million was spent properties including the now infamous six-bedroom, 11,500 square foot penthouse at the Albany resort community in Nassau where the FTX founder and his lieutenants Caroline Ellison, Nishad Singh and Gary Wang, among others, all lived.

The report contained a detailed list of other properties executives are alleged to have purchased with funds from accounts that commingled customer and company assets.

The Albany Honeycomb units

The FTX Group spent upwards of $18 million on properties in the Bahamas called the “Albany Honeycomb” units, according to the report. 

A similar unit in the complex, 6C, has almost 6,000 square feet and five bedrooms, according to a listing from Christie’s International Real Estate.

“The tastefully furnished living area benefits from a full wet bar with a wine cellar and floor-to-ceiling windows that opens to the breathtaking terrace overlooking the state-of-the-art mega yacht marina and turquoise blue waters,” that listing states. “The terrace is an entertainer’s dream, with a full kitchen, plunge pool and large family table.” 

Albany itself is a “600-acre exclusive luxury community” with a golf course, equestrian activities, full-service spa, among other amenities, according to the listing.

Old Fort Bay Lot A

Over $16 million was spent on “Old Fort Bay Lot A,” according to the report. Though it’s not clear which lot is the one Bankman-Fried bought, others in the area boast homes with expansive outdoor pools close to the water’s edge, according to Sotheby’s International Reality.

That site was sold to Bankman-Fried on April 7, 2022, according to the report. 

The listings were part of a 33-page report released on Monday detailing the commingling and misuse of customer deposits at the now bankrupt exchange. Customers are owed about $8.7 billion. 

“The image that the FTX Group sought to portray as the customer-focused leader of the digital age was a mirage,” FTX CEO and chief restructuring officer John J. Ray lll said in a statement. “From the inception of the FTX.com exchange, the FTX Group commingled customer deposits and corporate funds, and misused them with abandon at the direction and by the design of previous senior executives.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The bill would provide guidelines for U.S.-based crypto exchanges to register with regulators.

A federal judge has rebuffed Binance’s request to curtail the U.S. Securities and Exchange Commission’s (SEC) use of language pertaining to Binance.US’ management of customer funds in press releases, arguing the statements could hurt the company at trial.

After the recent release of a proposal for a new “v4” version of the decentralized exchange Uniswap, CoinDesk’s Sam Kessler chats with Uniswap Labs CEO Hayden Adams about the case that DeFi is “here to stay” and his position that the U.S. “lags behind” on crypto regulation.

A new report made in the FTX group’s bankruptcy process, delivered by caretaker leadership, provides more details about allegations of commingling and misusing customer assets for the aims of the company founder Sam Bankman-Fried.

Contradicting past excuses by Bankman-Fried that customer funds were not knowingly misdirected, the debtors said in Monday’s report that Bankman-Fried and a senior lawyer for FTX, among others, lied to banks and auditors, gave false documents, and moved FTX from country to country in order to prevent the discovery of lies and alleged fraud.

The lawyer is not directly identified in the document, though a section of the report details their alleged role in deceiving “customers, banks, auditors, investors, and other third parties,” a potentially criminal act.

FTX’s bankruptcy lawyers and current CEO John Ray III, a corporate debt restructuring specialist, claim in court that Bankman-Fried and other senior executives funneled customer deposits through Alameda Research and other affiliated companies in order to mask the purpose of transactions — which also complicates efforts to repay customers.

Commingling deposits

“Because the commingling and misuse of FTX.com customer deposits occurred for several years, it is extraordinarily challenging to trace the source of funding for particular FTX Group transactions, or to differentiate between FTX Group operating funds and FTX.com customer deposits,” FTX’s caretaker leadership told the U.S. Bankruptcy Court for the District of Delaware.

In a shot at Bankman-Fried’s public defense in the wake of FTX’s collapse that he did not knowingly misuse customer funds, the report goes on to note that “the FTX Group knew how to create a contractual agreement to separate and protect customer deposits when it suited the FTX Group to do so,” and singles out FTX Japan, one of the few solvent pieces of the failed crypto empire, as a unit of FTX that created actual safeguards for company assets.

“By contrast, and even though they were occasionally revised, the Terms of Service never stated that FTX Trading Ltd. separated and protected customer fiat currency deposits,” the report goes on to say. “Instead, in the isolated instances in which a customer inquired directly on the subject, employees lied.”

The report details additional alleged malfeasance beyond what is already public record.

Better call ‘Attorney-1’

An exhibit within the report repeatedly singles out “Attorney-1,” an unnamed FTX lawyer, for participating in and aiding allegedly fraudulent acts.

In one incident, a “less senior attorney” who had been with the FTX group of companies for less than three months raised concerns that another entity controlled primarily by Bankman-Fried, called North Dimension, had received customer assets.

“Attorney-1 responded by calling the attorney and asking him to meet in person the same day, a Saturday. When the attorney arrived to the meeting as requested, Attorney-1 fired him,” the report reads.

The report also claims that Attorney-1 helped Bankman-Fried lie to Congress during testimony before a Senate committee, and aided in the creation of a “sham agreement” to mask the source of fund transfers in order to allow FTX to continue to allegedly redirect customer assets.

According to FTX’s bankruptcy lawyers, that included drafting and backdating a fake intercompany agreement in order to deceive an external auditor in preparation for a potential initial public offering in 2021.

“While the IPO was not ultimately consummated, the FTX Group proceeded to share the false and misleading audited financials with potential investors in connection with its $400 million Series C financing that closed in January 2022,” the report claims.

Moving to warmer climes

FTX’s move from Hong Kong to the Bahamas was largely to avoid scrutiny into possibly illegal operations, the bankruptcy court document claims.

“In moving to the Bahamas, where they incorporated FTX DM in July 2021, the FTX Senior Executives sought to minimize any substantive change to or scrutiny of their business,” says the report.

Attorney-1 paid a “former Bahamian official” a $1 million bonus for obtaining a business license for FTX Digital Markets, the main FTX.com platform, which was located in the Bahamas. The former official obtained the license within six weeks, four less than the company had set as its goal.

The FTX group’s current leadership now alleges that FTX used the Bahamian operation to funnel at least $5.4 billion of customer assets into another corporate entity.

FTX executives also spent over $243 million in company funds to make themselves feel more at home in the Bahamas, including buying multimillion dollar properties for friends and family in addition to employees.

At the direction of Bankman-Fried and other executives, the group of companies bought over 30 properties, including the infamous six bedroom, 11,500 square foot penthouse at the Albany resort community in Nassau where the FTX owner and his lieutenants Caroline Ellison, Nishad Singh, and Gary Wang all lived.

“The FTX Group funded these real estate purchases from accounts that held commingled customer and corporate funds,” the report claims.

FTX Foundation alleged to receive misused customer assets

According to the report, despite claiming to be funded by FTX customer fees, the FTX Foundation instead drew money out of Alameda Research and North Dimension bank accounts that received FTX customer assets, which were commingled with corporate funds.

One of the grants issued using commingled funds was to further the creation of animated YouTube videos related to Effective Altruism, according to details provided in the report.

The FTX caretaker leadership says approximately $20 million from an account where customer funds were commingled was sent to Guarding Against Pandemics, a nonprofit founded by Bankman-Fried’s brother, Gabe.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.