SEC Sues Binance and Its CEO, Changpeng Zhao

The SEC on Monday sued Binance and its CEO, Changpeng Zhao, for allegedly mishandling funds and lying to regulators.

On Monday, the US Securities and Exchange Commission (SEC) accused cryptocurrency exchange Binance of allegedly mishandling customer funds and lying to investors and regulators about its operations.

The SEC also sued Binance founder Changpeng Zhao, alleging that he and the exchange failed to restrict US customers from its platform and mislead investors about its market surveillance controls. The regulator further accused Binance of operating as an unregistered securities exchange, Reuters reports.

In a press release, the SEC said:

The Securities and Exchange Commission today charged Binance Holdings Ltd. (“Binance”), which operates the largest crypto asset trading platform in the world, Binance.com; U.S.-based affiliate, BAM Trading Services Inc. (“BAM Trading”), which, together with Binance, operates the crypto asset trading platform, Binance.US; and their founder, Changpeng Zhao, with a variety of securities law violations.

In a case filed in federal court in Washington, DC, the SEC said the exchange has been mixing “billions of dollars” in customer funds and secretly sent them to Merit Peak Limited, a separate company controlled by Zhao. The SEC’s complaint details that Binance and Zhao controlled customers’ assets, allowing them to mix and divert funds and that Binance created separate US entities “as part of an elaborate scheme to evade US federal securities laws.”

Gary Gensler, Chair of the SEC, said:

Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.

Adding:

As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied.

They attempted to evade US securities la

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Author: Jana Serfontein

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