US SEC Files 13 Charges Against Binance and Changpeng Zhao for ‘Web of Deception’

The US Securities and Exchange Commission has charged crypto exchange Binance and its founder Changpeng Zhao with a number of securities law violations.

The regulator alleges that while Zhao and Binance publicly claimed that US customers were prohibited from transacting on their platform, in fact they secretly tried to allow high-value US customers to do so. had broken his own controls.

The SEC said that while Zhao and Binance publicly claimed that Binance.US was built as a separate, independent trading platform for US investors, they secretly controlled the platform’s operations behind the scenes. did.

One of the more concerning allegations leveled against the crypto exchange is the allegation that Zhao and Binance control the assets of the platform’s customers.

This allegedly allowed them to mix or switch clients’ assets, including an entity owned and controlled by Zhao called Sigma Chain.

The SEC complaint further alleges that BAM Trading and BAM Management US Holdings misled investors regarding non-existent trading controls on the Binance.US platform, while Sigma Chain engaged in manipulative trading that inflated the platform’s trading volume. artificially increased.

In addition, the complaint alleges that the defendants concealed the fact that it was pooling billions of dollars of investor assets and sending them to a third party, Merit Peak Ltd., also owned by Zhao.

Gary Gensler

“Through thirteen allegations, we allege that Zhao and the Binance Entities engaged in a widespread web of fraud, conflict of interest, lack of disclosure and calculated evasion of the law. As alleged, Zhao and Binance misled investors about their risk control and corrupted trading volumes, while actively concealing who was operating the platform, its affiliated market maker’s manipulative trades, and even where and With whom the investor funds and crypto assets were taken into custody.

He attempted to evade US securities laws by announcing sham controls, which he defied behind the scenes so that he could keep high-value US clients on his platform. The public should be wary of investing any of their hard earned money with or on these illegal platforms.

SEC Chairman Gary Gensler said.

Binance denied these allegations, saying that it was “disappointed” that the SEC had chosen to file a complaint and claimed to be actively cooperating with the SEC’s investigation and “will do its best to answer their questions and address their concerns.” worked hard to do”.

The crypto exchange said it intends to vigorously defend its platform, calling the SEC’s actions misguided and refusing to provide much-needed clarity and guidance to the digital asset industry.

read the statement from Binance,

“Any allegation that user assets have ever been at risk on the Binance.US platform is simply false, and there is zero justification for staff action, as staff have had ample time to conduct their own investigation.

All user assets on Binance and Binance affiliated platforms, including Binance.US, are safe and secure, and we will vigorously defend any allegations to the contrary. Instead, the SEC’s actions appear to be in service of attempting to wrest jurisdictional claims from other regulators — and investors do not appear to be the SEC’s priority. Because of our size and global name recognition, Binance is an easy target now caught in the middle of a US regulatory tug of war.

The statement also criticized the SEC for allegedly misguided lawsuits, claiming that the real intent of the regulator appears to be to grab headlines.

Amid repeated setbacks to Binance, there are rumors that Richard Teng may emerge as Zhao’s successor in a bid to appease US regulators.

The crypto industry which was just starting to show signs of recovery from the FTX contagion saw bitcoin fall to its lowest level since March as the news emerged.