Breaking News!!! Binance Sued By SEC

The US Securities and Exchange Commission (SEC) has brought forth a series of charges against cryptocurrency exchange Binance, its affiliated entities, and Founder/CEO Changpeng Zhao, alleging the operation of illegal trading platforms, the offering of unregistered crypto asset securities, and the commingling of customers' funds.

According to the SEC, Binance operated as an exchange, broker-dealer, and clearing agency without proper authorization, a claim similar to that made by the US derivatives watchdog, the Commodity Futures Trading Commission (CFTC), two months prior.

In its complaint filed with a district court in Columbia, the SEC accused Binance Holdings of running unregistered crypto exchanges, namely Binance.com and its US arm, Binance.US. The regulator also alleged that Binance manipulated its controls to allow high-value US customers to trade on Binance.com, despite publicly stating that US clients were restricted from the platform.

Furthermore, the SEC claimed that affiliated entities BAM Trading and BAM Management, together with Binance, offered and sold unregistered tokens (BNB) and stablecoins (BUSD) on the Binance.US platform. These entities also allegedly provided unregistered profit-generating programs and crypto staking products to US investors.

The SEC further accused Zhao and Binance of secretly controlling the US arm, despite asserting publicly that it operated as an independent trading platform for US investors.

In February, the SEC alleged that Zhao and Binance had access to Binance.com and Binance.US, enabling them to commingle customer assets or redirect them to Sigma Chain, a market maker owned and controlled by Zhao. These assets were later transferred to Merit Peak Limited, also owned by Zhao, and subsequently sent to a third party for the purchase and sale of crypto assets.

The SEC claimed that BAM Trading and BAM Management misled investors about surveillance controls to prevent manipulative trading on Binance.US, allowing them to raise approximately $200 million from private investors and attract billions of dollars in trading volumes.

Additionally, the SEC accused Binance and Zhao of implementing a multi-step plan to evade US laws, potentially jeopardizing billions of dollars of US investor capital.

In response to the lawsuit, Binance stated in a blog post that the SEC had abandoned efforts to negotiate a settlement and criticized the regulator for rushing to claim jurisdictional ground. Binance assured users that their assets on the US trading platform were secure and pledged to vigorously defend against the allegations.

Binance emphasized its readiness to confront the SEC's actions within the confines of the law, rejecting the notion that users' assets were at risk and expressing dissatisfaction with the SEC's handling of the investigation.