The Securities and Exchange Commission complaint, filed in a federal court in Washington, D.C., lists 13 charges against Binance, CEO Changpeng Zhao, and the operator of its purportedly independent US exchange.
WASHINGTON, DC, USA – US regulators sued Binance and its CEO Changpeng Zhao on Monday, June 5, for allegedly operating a “web of deception,” piling further pressure on the world’s biggest cryptocurrency exchange and sending bitcoin to its lowest in almost three months.
The SEC also claimed that Binance and Zhao, its billionaire founder and one of the crypto industry’s highest-profile moguls, secretly controlled customers’ assets, allowing them to commingle and divert investor funds “as they please.” “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,” SEC Chair Gary Gensler said in a statement., Binance said: “We intend to defend our platform vigorously,” adding that “because Binance is not a US exchange, the SEC’s actions are limited in reach.”
Bitcoin, the world’s biggest cryptocurrency, fell as much as 6% BTC=BTSP on the news to its lowest in almost three months. Binance’s own cryptocurrency BNB, the world’s fourth-largest by market size, dropped more than 5%. “I think that there’s a big risk here that this could be crippling to Binance,” said Ed Moya, senior market analyst at Oanda.The SEC complaint is the latest in a series of legal headaches for Binance, which was also sued by the US Commodity Futures Trading Commission in March for operating what the regulator alleged were an “illegal” exchange and a “sham” compliance program. Zhao called those an “incomplete recitation of facts.
The SEC alleged that Zhao designed and implemented a plan to “surreptitiously evade U.S. laws.” The agency said Binance’s chief compliance officer admitted that: “We do not want [Binance].com to be regulated ever.” It said Zhao directed Binance.US even though the US entity has long said it operates independently.
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