In a new lawsuit brought against Binance by the U.S. Securities and Exchange Commission, the regulator claims the crypto exchange followed through with much of a so-called "Tai Chi plan" in setting up its U.S. entity.
The fresh allegation followed a 2020 Forbes report that claimed much of the same thing, referring to the Chinese martial art that's practiced for self-defense and known for avoiding the use of direct force. Binance refuted the story at the time, claiming that it contained "numerous false, misleading and defamatory statements."
In the new suit, the SEC asserts that an owner of another crypto exchange in the U.S. advised Binance on setting up its own entity in the region and suggested two approaches, including a moderate plan to establish a 'Tai Chi' entity that would "reveal, retard, and resolve built-up enforcement tensions" while protecting the main exchange from liabilities.
After considering the plan, Binance CEO Changpeng Zhao is alleged to have said that the exchange had talked to law firms that suggested a more conservative approach, according to the filing. But he said there were elements from the plan that the exchange may combine, the SEC claimed.
"In fact, Binance implemented much of the Tai Chi Plan," the SEC said in the suit. "In addition to creating BAM Trading and the Binance.US Platform, Zhao and Binance implemented policies and controls to give the impression that the Binance.com platform was blocking U.S. customers while at the same time secretly subverting those controls."
The claims are similar to ones in the Forbes report that first broke the news of the Tai Chi document and claimed it was presented to senior Binance executives. The publication also identified the creator of the document as Harry Zhou, the co-founder of San Francisco-based exchange Koi Trading, which is backed by Binance.
Binance initially sued Forbes in November 2020 over the report, before dropping the lawsuit in February 2021.
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