The US Securities and Exchange Commission (SEC) is seeking “alternative services” from the US District Court in Washington, DC, to issue a legal subpoena to the CEO of cryptocurrency exchange Binance, Changpeng Zhao.
Zhao and Binance were recently sued by the SEC for their alleged unregistered securities operations. In case documents filed with the District Court on June 7, the SEC requested substituted service of service. It explains its apparent position that typical services (requiring the services to be present and signed) can be difficult in this context:
“Binance and Zhao are not typical foreign entities and individuals who are widely known for disagreeing with, let alone identifying, the premise of headquarters or residence, while Zhao is known for protecting his whereabouts.” Despite the alleged difficulty serving Zhao , the law may not require the CEO to appear in court simply to respond to the subpoena; however, courts often require some form of service even if the defender does not need to appear. The SEC also asked the court to order Zhao and Binance to immediately provide “sworn accounting” essentially a legal disclosure of financial information.
According to the complaint, the SEC was unable to ascertain the full extent of the defenders' assets, the exact whereabouts of investor funds, or the condition or location of other assets that may have been used to satisfy monetary judgments against the defenders.
The SEC again cited logistical issues as a mitigating factor. The sworn accounting request stemmed from "BAM Trading's inability to provide accurate information about Zhao's whereabouts or the company's "location abroad", "the filing said.
BAM Trading is the organization working with Binance to oversee Binance.US, a setup designed to allow the company to separate its US operations from other entities. Zhao's location remained unknown at the time of publication. He is a Chinese-born Canadian citizen who reportedly bought a house in Dubai in 2021. However, as of March 28, 2023, the CEO will be split between Dubai and France, according to Binance spokesperson Dewi Mustajab.
