The US Securities and Exchange Commission (SEC) filed a lawsuit against Binance, its US platform and CEO Changpeng Zhao (CZ) in the District Court for the District of Columbia on June 5.
4.
Our team is standing by, making sure systems are stable, including withdrawals and deposits.
We’ll issue a response once we see it’s compliant. I haven’t seen it yet. The media gets the information before we do.
— CZ Binance (@cz_binance) June 5, 2023
The American regulator pressed 13 charges against Binance, including unregistered offers and sales of BNB (BNB) and BUSD tokens, Simple Earn and BNB Vault products and its participation program. Additionally, the SEC alleges in the lawsuit that Binance failed to register its Binance.com platform as an exchange or broker clearing agency. It further claimed that Binance and BAM Trading failed to register Binance.US as an exchange, broker and clearing agency. CZ was sued as a “controlling person”.
According to the dress:
“The defendants have enriched themselves to the tune of billions of US dollars while putting investors’ assets at significant risk. […] The defendants have engaged in multiple unregistered offers and sales of crypto-asset securities and other investment schemes.”
He continued: “Defendants BAM Trading and BAM Management defrauded equity, retail and institutional investors about alleged monitoring and controls over manipulative trading on the Binance.US platform, which were in fact virtually non-existent.”
Among the allegations behind the charges are claims that Binance did not restrict the use of Binance.com to US investors, and that Binance.US engaged in wash trading through its “non-main trading company revealed Sigma Chain”, which is owned by CZ. .
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The lawsuit further claims that funds from Binance and Binance.US were commingled in an account controlled by Merit Peak Limited, an associate of CZ. These charges echo complaints filed by the Commodity Futures Trading Commission on March 27. CZ denied these charges in a detailed blog post.
SEC Chairman Gary Gensler said in a statement:
“Zhao and Binance allegedly misled investors about their risk controls and corrupt trading volumes while actively concealing who operated the platform, their affiliate market maker’s manipulative trading, and even where and with whom they kept investors’ funds and crypto assets.”
The SEC demands a permanent ban on Binance and CZ from further activities, dumping of ill-gotten gains with interest and financial penalties.
The lawsuit claimed that the tokens traded on the Binance exchange were securities. These tokens are BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI.
Binance and Binance.US separately responded to the lawsuit. Binance.US stated in a tweet that the SEC’s claims are its “latest example of regulation by enforcement.” The lawsuit “is without merit and we intend to vigorously defend ourselves,” he continued.
In a blog post on Binance.com, the company wrote:
“From the beginning, we have actively cooperated with the SEC’s investigations and worked hard to answer their questions and address their concerns. […] While we take the SEC’s complaints seriously, they should not be the subject of an SEC enforcement action, let alone in an emergency.”
“Any allegation that users’ assets on the Binance.US platform have ever been at risk is simply incorrect,” Binance.com added. “The SEC’s actions here appear to be in the service of an effort to rush to claim jurisdictional ground from other regulators, and investors do not appear to be the SEC’s priority.”
Allegations against Binance are not new. An SEC investigation into Binance reportedly began in June 2022. Binance has called reports of fund mismanagement a “conspiracy theory.”
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