SEC Sues Binance and CEO for Alleged Securities Violations

The U.S. Securities and Exchange Commission today sued Binance, hitting the world’s biggest cryptocurrency exchange and its CEO with 13 charges.

As first reported by Bloomberg, the digital asset behemoth and its CEO Changpeng ‘CZ’ Zhao, who is Binance’s founder and controlling shareholder, have been accused of breaking U.S. securities rules, a court filing shows.

The SEC charges include the unregistered offer and sale of crypto assets, failure to restrict U.S. investors from accessing Binance.com, and operating as an unregistered exchange, broker, and clearing agency.

A Monday SEC court document filed in federal court in the District of Columbia alleges that Binance and its boss had a “blatant disregard” of federal securities laws and “enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.”

“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,” wrote Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, in a press release on Monday.

Binance Downplays Canadian Securities Regulator Investigation After Leaving Country

The world’s biggest crypto exchange continues to find itself in hot water. Canada’s Ontario Securities Commission hit Binance with an investigation order last month, documents show.  According to a filing with the Capital Markets Tribunal, Binance was going to be investigated to see if it had tried to skirt round securities laws.  Binance days later announced that it was leaving the country due to “new guidance related to stablecoins and investor limits.” The exchange asked the Securities Commi...

SEC Chair Gary Gensler added that Binance “attempted to evade U.S. securities laws by announcing sham controls that they disregarded behind the scenes” in a bid to keep big American investors using the platform.

Zhao said on Twitter that he had not yet seen the lawsuit and wrote the number 4, which he often posts to allude to a tweet he made back in January that connects the number to “Ignore FUD, fake news, attacks, etc.”

“Haven't seen it yet,” he wrote on Monday. “Media gets the info before we do.”

Binance’s press team did not immediately respond to Decrypt’s request for comment.

Binance’s native BNB token dropped sharply on the news: the asset is currently trading for $284.68, according to CoinGecko, a 7.2% 24-hour dip.

BNB

-0.49%$592.93

---

24H7D1M1YMAX

Price data by

BNB price

The SEC alleges that Binance and Zhao misused and commingled customers’ funds. The defendants even allegedly diverted them to a trading entity that Zhao controlled called Sigma Chain.

It added that Zhao and his company engaged in an “extensive web of deception.”

Binance has become a controversial company lately as American regulators have been chasing it and launching a number of investigations into the crypto company.

The CFTC, SEC, and IRS have all opened investigations into the exchange and Department of Justice prosecutors in December were reportedly weighing up whether to aggressively go after the exchange or take time to review more evidence.

Just in April, lawyers hit Binance boss Changpeng Zhao and his exchange with a $1 billion civil lawsuit for allegedly touting unregistered securities and paying celebrities to help do so.