SEC v. Binance: Jurisdiction and Venue of Legal Proceedings

JURISDICTION AND VENUE

20. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and Sections 21(d) and 27(a) of the Exchange Act [15 U.S.C. §§ 78u(d) and 78aa(a)].

21. Defendants, directly or indirectly, have made use of the means or instruments of transportation or communication in interstate commerce or of the mails, including Defendants’ regular use of the Internet and the U.S. banking system, in connection with the transactions, acts, practices, and courses of business alleged in this Complaint.

22. Venue is proper in the District of Columbia pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)]. Among other acts, Defendants failed to register with the SEC in this District as an exchange, broker-dealer, or clearing agency as required under the Exchange Act. In addition, they failed to register with the SEC in this District the offer and sale of securities, and they conducted unregistered offers and sales of securities to residents of, or persons located in, this District.

23. Defendants also transacted business in this District. At least before September 2019, Binance (as controlled by Zhao) made the Binance.com Platform available for trading to customers in this District. Further, BAM Management and BAM Trading (also under Zhao’s and Binance’s control) obtained District of Columbia business licenses and transacted business in this District, including through the operation and availability of the Binance.US Platform, which was accessed by individuals in the District, and through personnel (such as one of its CEOs) in this District, who provided services to and engaged in business with all Defendants.

24. Defendants’ violations of the federal securities laws alleged in this Complaint occurred within the United States and had a foreseeable substantial effect within the United States. Binance and Zhao actively solicited U.S. investors to trade on the Binance Platforms. Binance and Zhao, for example, regularly solicited U.S. investors via their social media and other internet postings to trade on both of the Binance Platforms. Zhao also directed other Binance employees to actively solicit and take other steps to retain U.S. investors on the Binance.com Platform, even after Binance publicly announced in June 2019 that it would no longer serve U.S. investors. By then, Binance estimated that it had over 1.47 million U.S.-based investors on the Binance.com Platform, and it continued to maintain a substantial U.S. customer base for several years thereafter. In addition, Binance has employees located in the United States, and residents of this District invested in schemes Binance offered and sold as securities including BUSD and the Simple Earn program.

25. Moreover, until at least the end of 2022, Binance, at Zhao’s direction, maintained custody and control of the crypto assets deposited, held, traded, and/or accrued by customers on the Binance.US Platform.