Binance’s Troubles Deepen: SEC Lawsuit Hits Largest Crypto Exchange
The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, the world's largest cryptocurrency exchange, and its CEO and founder, Changpeng Zhao.
The SEC accuses Binance of allowing US customers on its platform, deceiving investors about market surveillance controls, and operating an unregistered securities exchange.
According to the SEC, Binance and Zhao also controlled customers’ assets and diverted customer funds without proper disclosure or adherence to the law. The complaint alleges that Binance created US entities to evade US federal securities laws.
Additionally, the SEC claims that Sigma Chain, a trading firm owned by Zhao, engaged in wash trading on the Binance.US platform to artificially inflate the trading volume of crypto asset securities from around three years ago until June 2022.
SEC Chair Gary Gensler described the alleged actions as a web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.
In a blog post, Binance responded to the lawsuit, stating its intention to vigorously defend its platform. They argued that the SEC’s actions are limited in reach because Binance is not a US exchange. The post also emphasized that user assets on the Binance.US platform were never at risk.
This lawsuit adds to Binance’s existing legal troubles. In March, the US Commodity Futures Trading Commission sued the exchange for allegedly operating an “illegal” exchange and having a “sham” compliance program. Binance is also under investigation by the US Department of Justice for suspected money laundering and sanctions violations.
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Market analysts suggest that the SEC’s allegations could severely affect Binance and have a broader impact on the crypto industry. Binance dominates crypto trading, accounting for a significant portion of the market.
The founder of Binance, Changpeng Zhao, a Canadian citizen who spent his early years in China, established the company in Shanghai in 2017. While the holding company is based in the Cayman Islands, Binance does not disclose its headquarters or the location of its main Binance.com exchange.
Previous reports have indicated that Binance processed payments worth at least $10 billion for individuals and entities attempting to evade US sanctions. There were also allegations of commingling customer deposits with company funds, which Binance denied, stating that users were purchasing Binance’s dollar-linked crypto token rather than making deposits.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
