Accusations against Binance and its CEO for violating U.S. securities
The Securities and Exchange Commission (SEC) has filed 13 accusations against Binance, the biggest cryptocurrency exchange in the world, and its founder Changpeng Zhao, alleging that they mixed up customer assets worth billions of dollars and sent them to a European business under Zhao’s control. In order to permit high-net-worth American investors and clients to trade on Binance’s unregulated foreign exchange, the U.S. regulator alleges that Zhao and Binance bent their own regulations.
The SEC lawsuit claims that one senior executive described the business as an “unlicensed equities exchange in the USA.” The complaint claims that Binance set up Binance.US to frustrate law enforcement authorities and shield the core business and Zhao while shielding Binance from repercussions.
Former CEOs of Binance.US Catherine Coley and Brian Brooks deposed before federal regulators and highlighted concerns about Zhao’s level of control. According to a previous CEO who went by the moniker “BAM CEO B,” they departed the organization when they saw that their purpose was not being carried out.
According to the SEC, Binance earned $11.6 billion in income between June 2018 and July 2021, mostly from transaction fees. Despite federal statutes that forbid the unofficial sale of securities, the complaint alleges that Binance deliberately sought out American customers. According to the SEC, Binance was aware of tens of thousands of U.S. consumers but did nothing about it.
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Charges against Binance and its CEO for violating U.S. securities
In addition, Zhao is charged with ordering the construction of evasion plans for high-net-worth clients, using VPN services to conceal their whereabouts in the United States, and presenting compliance documents to conceal their nation of origin. Employees at Binance allegedly pushed customers to utilize VPNs to get over the exchange’s “know your customer” procedures.
The SEC further asserts that Binance and Zhao inflated trading prices and made money off of their consumers by using market-making businesses they controlled. The businesses, Merit Peak and Sigma Chain are accused of engaging in “wash trading,” which involves trading amongst oneself to artificially inflate the price of crypto assets. According to reports, Sigma Chain obtained a total of $190 million for Zhao and spent $11 million on a yacht.
Zhao addressed the accusations on Twitter and refuted them with the number “4”, which is a catchphrase used by Binance’s community to dispel anxiety, trepidation, and (FUD). In a blog post, Binance expressed disappointment with the SEC’s complaint and noted that it has assisted with the inquiries.
Following similar accusations made against Binance by the Commodity Futures Trading Commission for failing to stop American users from accessing its site, the SEC filed a complaint against Binance.
