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New details revealed in the SEC complaint could explain why Brian Brooks abruptly stepped down as CEO of Binance.US in 2021, a crypto lawyer suggests.
The SEC’s latest complaint against Binance could point to why former Binance.US CEO Brian Brooks chose to step down in August 2021, only three months after his appointment.
According to a June 5 tweet from cryptocurrency lawyer James Murphy — known on Twitter as MetaLawMan — the SEC complaint cites an “unnamed source” who ran Binance.US for a brief period of time in 2021. The dates correlate with the time that Brooks was CEO of Binance.US.
1/ The SEC complaint against @Binance appears to solve the mystery of why Brian Brooks abruptly resigned as CEO of @BinanceUS in 2021.
CZ allegedly reneged on promises that Brooks would be given autonomy to run https://t.co/reBq6K7KAs independently from @Binance.— MetaLawMan (@MetaLawMan) June 5, 2023
Brooks, a former top banking regulator, led operations at the crypto exchange after replacing former CEO Catherine Coley on May 1, 2021. According to comments cited in the complaint, Brooks quickly realized that he was “not actually the one running this company.” Upon recognizing this, he decided to leave, announcing his resignation just three months later, on Aug. 7.
Binance Chief Communications Officer Patrick Hillman has, however, pushed back on Murphy’s speculation, adding that this “might be one person’s narrative” and that it “might not hold up to the test of time.”
Cointelegraph reached out to Binance.US and Brooks for comment but has yet to receive a response.
The information comes in the wake of the United States Securities and Exchange Commission filing a total of 13 charges against Binance for allegedly failing to register as a securities exchange and operating illegally in the U.S.
Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law. https://t.co/E06hVOaYby
— Gary Gensler (@GaryGensler) June 5, 2023
The news wreaked havoc on the price of cryptocurrencies, including Bitcoin (BTC) and Ether (ETH), which are down 5.6% and 4.3% respectively in the last 24 hours, according to data from Cointelegraph Price Index.
Shares of publicly-traded crypto companies in the U.S. also witnessed a sharp decline in price, with Coinbase (COIN) plunging 9% during market trading hours on June 5.
Coinbase next?
Mark Palmer, the senior equity research analyst at Berenberg Capital, told Cointelegraph that several of the details revealed in the lawsuit “echo” those it previously filed against similarly U.S.-based crypto exchanges Bittrex and Kraken.
Related: SEC’s Binance suit contains heavy mix of predictable charges, novel revelations
As such, Palmer believes that “these cases in aggregate represent a preview of the action that is likely to be filed against Coinbase.”
Palmer said that Coinbase investors should be focusing on whether the exchange has the ability to “successfully pivot” its business model and geographic focus if it were forced to “curtail or cease” a large portion of its operations in the U.S. as a result of SEC enforcement.
“We estimate that at least 37% of COIN’s net revenue would be at risk if the SEC were to target the company’s crypto token trading and staking operations.
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