SEC files serious suit against Binance and its CEO Changpeng Zhao
SEC files serious suit against Binance and its CEO Changpeng Zhao
The U.S. Securities and Exchange Commission (SEC) sued Binance and its CEO Changpeng Zhao, on Monday, accusing them of creating and using a "fraudulent network".
The SEC's lawsuit, filed in federal court in Washington, D.C., alleges 13 charges against Binance and its founder, Changpeng Zhao, that are way more stronger than the civil charges brought earlier this year by the Commodity Futures Trading Commission (CFTC).
"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," said Gary Gensler, chairman of the SEC.
The SEC said in a press release that Binance artificially inflated its trading volumes, failed to restrict U.S. clients from accessing its platform, and misled investors about its market controls. Binance and its CEO also exercise control over the assets of the platform's clients, allowing them to pool or divert client assets as they see fit, including to Sigma Chain, which is owned and operated by Changpeng Zhao.
In addition, it is alleged that Binance created a series of entities to evade U.S. federal securities laws.
"We allege that Zhao and Binance's organizations engaged in an extensive network of deception, conflicts of interest, non-disclosure, and willful evasion of the law," added Mr. Gensler.
In response to the SEC's action, Binance.US said in a blog post on Twitter: "We believe the lawsuit is baseless and we intend to defend ourselves vigorously. However, we want to address what has become an all-too-common occurrence for entities and individuals operating in the American digital assets industry. For nearly two and a half years, Binance.US has engaged in good faith with the SEC."
"The SEC is attempting to effectively destroy our industry. Simply put, today's lawsuit is not justified by the facts, the law, or the Commission's own precedent. We continue to call on Congress to step in and pass bipartisan legislation that creates a workable regulatory regime for digital assets and reins in the bureaucratic overreach of which our industry is the victim," the blog post said.
Previously, we reported that Richard Teng had been named as a possible candidate to lead Binance.
The Binance exchange launched in 2017 and is the largest platform in the cryptocurrency market. The exchange is also a cryptocurrency startup that has its own "proprietary asset," which is used as an internal unit of payment in the Binance ecosystem.
