U.S. regulators on Monday accused Binance and its CEO Zhao Changpeng of operating a “web of deception” to put further pressure on the world’s largest cryptocurrency exchange, pushing bitcoin to nearly three He filed a lawsuit on suspicion of dropping the stock to a monthly low.
A Securities and Exchange Commission (SEC) complaint filed in federal court in Washington, D.C., lists 13 charges against Binance, Zhao, and their allegedly independent U.S. exchange operators.
The SEC alleges that Binance artificially inflated trading volumes, misappropriated customer funds, failed to restrict U.S. customers’ use of the platform, and misled investors about market surveillance regulations.
The SEC also said that Binance and its billionaire founder, Chao, one of the crypto industry’s most high-profile tycoons, would secretly manage client assets and invest investors’ money “as much as they wanted.” He claimed that it allowed them to be mixed and misappropriated.
The SEC also alleges that Binance set up a separate legal entity in the United States “as part of an elaborate plan to circumvent U.S. federal securities laws,” citing a number of practices originally reported by Binance. Reuters In a series of surveys on exchanges published this year and 2022.
Almost three years ago until June 2022, Sigma Chain, a trading company owned and managed by Mr. Zhao, conducted so-called wash trading, artificially inflating the trading volume of cryptocurrency securities on the Binance.US platform. The SEC also argued that
“We allege that the Zhao and Binance corporate entities engaged in widespread deception, conflicts of interest, lack of disclosure, and deliberate circumvention,” SEC Chairman Gary Gensler said in a statement.
“We will vigorously defend our platform,” Binance said in a blog post, adding, “Because Binance is not a U.S. exchange, the SEC’s scope for action is limited.”
“The claims that user assets on the Binance.US platform have ever been compromised are completely false,” the blog post said.
Binance US, which is ultimately controlled by Mr. Zhao, said in a tweet that the lawsuit was “unjustified by facts, law, or the Commission’s own precedent.”
Bitcoin, the world’s largest cryptocurrency, plunged as much as 6% on the news, hitting its lowest level in almost three months. Binance’s own BNB, the world’s fourth-largest cryptocurrency by market size, is down more than 5%.
