Binance, CEO Zhao Turn to Gibson Dunn, Latham in CFTC Showdown

Binance Holdings Ltd. and its chief executive Changpeng Zhao have turned to law firms including Gibson Dunn & Crutcher and Latham & Watkins in a high-stakes showdown with the Commodity Futures Trading Commission.

Gibson Dunn partners Kendall Day, Stephanie Brooker and Richard Grime lead the firm’s team for Binance, according to appearances filed in Chicago federal court late Monday. Day and Brooker are former federal prosecutors, and Day also once led the Justice Department’s money laundering division.

Latham lawyers working on the case for Zhao, who is known as CZ, in his individual capacity include Douglas Yatter, a former top trial lawyer in the CFTC’s enforcement division.

The CFTC in March accused Binance, the world’s largest crypto exchange, of routinely flouting US derivatives rules and breaking the law by failing to register with the agency. Binance, whose holding company is based in the Cayman Islands, has called the action “disappointing” and said its made investments to ensure it doesn’t have American users.

Binance and Gibson Dunn did not immediately return requests for comment.

The CFTC’s action last month is part of a crackdown on crypto among regulators that gained momentum in wake of the collapse of FTX, the exchange once run by Sam Bankman-Fried, and broader upheaval in the digital assets market.

The Securities and Exchange Commission has aggressively scrutinized the industry. SEC head Gary Gensler has argued the industry is “a largely non-compliant field.”

CFTC Action

The top US derivatives regulator’s lawsuit targeted Binance, Zhao and Samuel Lim, the exchange’s former chief compliance officer, for alleged US rule violations.

The action claims that the exchange’s compliance procedures amounted to a “sham” and that it made efforts to increase its US presence despite publicly claiming it was restricting American users.

Lim is represented by Megan Cunniff Church and Kenneth Notter of the litigation firm MoloLamken, according to court filings.

Riley Safer Holmes & Cancila, including John Theis, a former Justice Department trial lawyer, is also representing Binance in the case.

Brooker, one of the Gibson Dunn partners representing Binance, previously served as the director of Treasury Department’s Financial Crimes Enforcement Network enforcement division.

Grime, a former assistant director of enforcement at the SEC, is a leader of Gibson Dunn’s securities enforcement group.

The case is CFTC v. Zhao et al, N.D. Ill., No. 1:23-cv-01887