Binance and its boss sued by the US regulator

The US financial markets regulator, the SEC, is taking action against Binance after months of investigation. He officially sued the world’s number one crypto-asset platform on May 5, along with its CEO Changpeng Zhao, in federal court in Washington for circumventing US laws. Also being sued are BAM Trading Services, which officially operated the trading platform in the United States, and Binance US.

13 counts

The SEC accuses Changpeng Zhao, known as “CZ”, of unofficially exercising effective control of Binance US, the officially independent US entity of Binance, and its funds.

Another grievance: according to the SEC, Binance allowed US residents to use its platform when the company was not registered with US authorities, nor its BNB cryptocurrency, nor its other financial products. According to his analysis, since July 2017 Binance would have earned at least $ 11.6 billion in income from US residents, through its brokerage, buy-sell and clearing house fees. None of these activities were recorded.

Deception, conflicts of interest, evasion, opacity

As revealed by a Reuters investigation, the SEC also accuses Binance of having disposed of funds deposited by customers of its platform to transfer them from one entity to another in complete opacity, contravening the principle of segregation of assets. . Several billion dollars of deposits would thus have been amalgamated and transferred to Merit Peak, owned by CZ.

In all, these are 13 counts – “all unjustified” according to Binance – which appear in the complaint filed by the regulator. “We argue that Zhao and Binance entities engaged in a wide web of deception, conflict of interest, lack of transparency, and willful evasion of the law”SEC Chairman Gary Gensler said in a statement. “They misled investors about their risk control practices and manipulated trading volumes while actively disguising who controlled the platform, and concealing where and by whom assets were kept (…) The public should beware of investing his hard-earned savings on these illegal platforms.”

The SEC requires a recovery, fines, compensation for injured investors, the cessation of incriminated activities, and a ban on launching new ones in the same sector by the entities targeted by the complaint, in the United States.

Last March, Binance was also sued by the CFTC, the US derivatives markets regulator, for “deliberate evasion” of federal laws.

On June 6, the SEC also announced that it was suing the American platform Coinbase, for its brokerage, purchase-sale and staking activities of products that it considers to fall within the scope of the regulation of financial securities.

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