The 136-page SEC complaint says Binance and CEO Changpeng Zhao, ‘enriched themselves by billions of US dollars while placing investors’ assets at significant risk’|Cryptodost|CC BY 2.0
The Securities and Exchange Commission (SEC) sued Binance and its billionaire founder, Changpeng Zhao, yesterday. The agency alleges multiple securities violations, including lying to investors as well as regulators and misusing customer funds.
The lawsuit alleges Binance mixed billions in customer funds and sent them to Merit Peak Limited, a separate company controlled by Zhao, to inflate trade volumes.
The suit also claims the company misled investors about its anti-market manipulation defenses.
SEC also alleges that the crypto exchange’s US-based customers were allowed to trade on Binance’s international platform, bypassing regulations. It further claims that a Chief Compliance Officer even texted a coworker in 2018. The message read, “We are operating as a f*ing unlicensed securities exchange in the USA bro.”
The 136-page complaint says Zhao and his company “enriched themselves by billions of US dollars while placing investors’ assets at significant risk.”
CEO Zhao denied all allegations on Twitter. Binance maintains that it has tried negotiating a settlement with regulators and is “disappointed” and “disheartened” by the SEC case.
Not the first
Binance and its CEO were sued by the Commodity Futures Trading Commission (CFTC) in March. The crypto giant is also facing a Department of Justice investigation over money laundering allegations.
After Sam-Bankman Fried’s FTX fall, the SEC is scrutinizing every crypto trading company operating in the country and Binance, with its $65 billion average daily trading volume, is no exception.