--- title: "Former SEC Lawyer Issues Warning That Binance Is an “FTX Redux”" description: "A former SEC lawyer says that a Binance bank run seems \"inevitable.\" Meanwhile, US regulator suspicion continues to mount against the crypto exchange." date: "2023-03-08" modified: "2023-03-08" authors: - name: "Maggie Harrison Dupré" job_title: "Senior Staff Writer" link: "https://futurism.com/authors/mharrison" url: "https://futurism.com/the-byte/sec-lawyer-warns-binance-ftx-redux" categories: - "Blockchain" - "Future Society" tags: - "binance" - "crypto" - "cryptocurrency exchange" - "the digest" --- # Former SEC Lawyer Issues Warning That Binance Is an “FTX Redux” ![A former SEC lawyer says that a Binance bank run seems "inevitable." Meanwhile, US regulator suspicion continues to mount against the crypto exchange.]() *\Image: Picture Alliance via Getty / Futurism\* ## Stark Warning It feels safe to say that John Reed Stark, a former attorney for the US Securities and Exchange Commission, is *not* a fan of the [cryptocurrency firm Binance](). The crypto exchange — now the world's largest in terms of trading volume, as a direct result of former rival FTX's spectacular November [collapse into bankruptcy]() — has faced [mounting controversy]() in recent days as the result of a [bombshell *Forbes* investigation]() alleging that Binance's "asset shuffling" is "eerily similar" to that of the now-defunct FTX. Binance "moved $1.8 billion of collateral meant to back its customers' stablecoins, putting the assets to other undisclosed uses," according to *Forbes*. "They did this without informing their customers." It's a serious allegation and one that Binance and its CEO, Changpeng "CZ" Zhao, have since denied. "I am deeply disappointed that Forbes continues to write baseless articles," Zhao wrote in a Feb 28 [Twitter thread](), "losing their own credibility." But Stark, among others, isn't buying it. "My take is that Binance is a shadow bank," the attorney wrote in a [scathing Monday tweet](), "minting their own counterfeit currency while providing limit-order books/brokerage/custody/clearing/settlement/etc. with no US regulatory oversight or audit." "It's FTX redux," he ominously added, "and an epic bank run seems inevitable." https://twitter.com/JohnReedStark/status/1632772383323873281 ## Warren Peace A bank run isn't entirely out of the question, considering that's exactly what happened to since-collapsed competitors [Voyager Digital](), [Celsius](), [Gemini](), and [FTX](), among others. And given how many investors have assets in the firm, the impact of a Binance bank run would be, put mildly, devastating. But that still-hypothetical scenario aside, Binance is facing very real trouble elsewhere: US Congress. Three US senators — Democrats Elizabeth Warren and Chris Van Hollen, along with Republican Roger Marshall — sent a bipartisan letter to Binance and its US subsidiary last week, demanding that the firms provide lawmakers with a copy of their records. "Your companies' apparent attempts at evading the enforcement of anti-money laundering laws, securities laws, information reporting requirements, and other financial regulations cast serious doubt on the stability and legitimacy of Binance and its related entities and on your commitment to your customers," the senators [wrote in the letter](), which was sent after the *Forbes* report was published, Unsurprisingly, Zhao maintains that it's all fake news. "Unfortunately, a lot of misinformation has been spread about our company," the crypto leader [told *Forbes*]() last week, "and we look forward to correcting the record." **READ MORE:** [*Binance is FTX Redux, Bank Run Seems Inevitable: Ex-SEC Lawyer*]() \[*Blockworks*\] **More on Binance:** [*Binance CEO Says Everything Is Fine as Withdrawals Surge to $3 Billion*]() ## Author At Futurism, I've reported extensively on the rise of AI as a cultural and business force shaping the media industry, and more broadly how those dynamics are changing how we all consume and share information and relate to one another. I'm also fascinated by public health policy and ethics, the role of emerging tech in politics and governance — and the powerful people and forces at those intersections — climate change, and the environment. My investigation on Sports Illustrated's use of AI-generated authors with fictional biographies won a 2024 Mirror Award for "Best Story on Media Coverage of Artificial Intelligence in Journalism and the Media" from Syracuse University's SI Newhouse School, I contributed to Niemen Lab's 2025 Predictions for Journalism series, and I've discussed my work for Futurism during appearances on NPR, CNN, the BBC, the CBC, and more. I grew up in rural Pennsylvania and attended the University of Massachusetts Amherst, where I played Division I field hockey for the Minutewomen as a midfielder. Since then, I've lived in New Orleans, Louisiana and Manhattan, New York. I spend my free time running, reading, perusing archival fashion, and searching for the world’s best negroni. I also have a debonair tuxedo cat, Westley, who's named after "The Princess Bride." ### Author social links [Bluesky]()