The US Securities and Exchange Commission on Monday accused Binance Holdings Ltd and its founder CEO Changpeng Zhao of breaking federal securities laws.
A lawsuit file against Binance and Changpeng Zhao in a US federal court on Monday alleged that the firm flouted investor protection rules by operating unregistered exchanges, misrepresenting trading controls and selling unregistered securities, among other violations, Bloomberg reported.
SEC Chair Gary Gensler 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.”
“The public should beware of investing any of their hard-earned assets with or on these unlawful platforms,” Gensler added.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement said “We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk – all in an effort to maximize their own profits.”
“By engaging in multiple unregistered offerings and also failing to register while at the same time combining the functions of exchanges, brokers, dealers, and clearing agencies, the Binance platforms under Zhao’s control imposed outsized risks and conflicts of interest on investors. Those risks and conflicts are only heightened by the Binance platforms’ lack of transparency, reliance on related-party transactions, and lies about controls to prevent manipulative trading. Despite their years-long efforts to not ‘be held accountable,’ today’s complaint begins the process of doing so,” Grewal added.
The SEC alleged that, while Zhao and Binance publicly claimed that US customers were restricted from transacting on Binance.com, Zhao and Binance in reality subverted their own controls to secretly allow high-value US customers to continue trading on the Binance.com platform.
The SEC’s complaint further alleges that BAM Trading and BAM Management US Holdings, Inc. (“BAM Management”) misled investors about non-existent trading controls over the Binance.US platform, while Sigma Chain engaged in manipulative trading that artificially inflated the platform’s trading volume
The SEC charged Binance for the unregistered offers and sales of BNB, BUSD, and crypto-lending products known as “Simple Earn” and “BNB Vault.”
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.