• Binance entities and CEO Changpeng Zhao are facing 13 charges from the US SEC.
  • Allegations revolve around securities law violations, among other crimes that the regulator has been clamping down against.
  • SEC Chair has called out the two household names for deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.
  • The regulator warns users against the two household names. 

Binance Exchange and its CEO Changpeng Zhao (CZ) are the latest targets by the United States Securities and Exchange Commission (SEC). Reportedly, the two household names have violated numerous securities laws, culminating in 13 charges in one go. Citing agency Chair Gary Gensler:

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.

Reportedly, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform. They also manipulated the trading of affiliate market makers, even where and with whom investor funds and crypto assets were in custody. Below is a detailed overview of the complaint.

Also Read: Will Binance CEO Changpeng “CZ” Zhao be the next Elon Musk for meme coins?

Binance and CEO charged by the SEC

Binance Holdings Ltd. and the famous CEO Changpeng Zhao face 13 different charges from the US SEC. Based on a recent press release, the duo, whose names go hand in hand, have violated several securities laws. Considering Binance Holdings Ltd, otherwise termed Binance, operates Binance.com and its US-based partner BAM Trading Services Inc. and Binance.US, the charges are against the entire powerhouse.

The press release alleges that Changpeng Zhao and his crypto conglomerate secretly went against their own restrictions against US customers transacting on Binance.com. Reportedly, “high-value customers in the US were allowed to trade on the exchange.” The federal regulator has also determined that while Binance and its CEO publicly claimed that Binance.US was an autonomous trading platform for investors in the US, things were different behind the scenes as CZ and Binance controlled the US-based entity’s operations.   

Allegedly, Binance and CZ also control assets of the platform’s entire customer base, which according to the SEC, leaves a loophole for commingling customer assets at will. Specifically, the regulator calls attention to Zhao’s Sigma Chain entity. Further, the agency calls out BAM Management, comprising BAM Trading and BAM Management US Holdings, Inc., for misleading investors that they controlled Binance.US’ trading operations when in a real sense, this control was nonexistent. Similarly, Zhao’s Sigma Chain is accused of manipulative trading to create the perception that the platform’s trading volume was thriving.

Binance and CEO violated critical registration-related provisions of the federal securities laws

Binance and CZ are also charged Binance entities for violating key registration-related provisions of the federal securities laws, including “operating unregistered national securities exchanges, broker-dealers, and clearing agencies.”

Binance and CZ are also charged for concealing billions of dollars of investors’ assets and sending them to a third party, Merit Peak Limited, owned by CZ himself. An excerpt from the complaint climaxes the entire filing, saying:

They attempted to evade US securities laws by announcing sham controls that they disregarded behind the scenes to keep high-value US customers on their platforms. The public should beware of investing any of their hard-earned assets with or on these unlawful platforms.

Other details in the complaint include:

  • Providing trading for securities such as BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI.
  • Providing coin-earning programs BNB Vault and Simple Earn, and staking investment plans.
  • Intentionally evading US supervision.

Crypto Twitter comes to Binance and CEO's defense

In a stunning turn of events, Crypto Twitter has responded to the development. One response that stands out is by  Cardano (ADA) founder Charles Hoskinson, in the following tweet:

Still, others have come to the rescue of Binance and its CEO, so much so that Changpeng Zhao has reacted to one retaliation against the SEC. Tron founder Justin Sun has also expressed support. 

Changpeng Zhao's response thus far has been a tweet saying "Stronger together."

Also Read: Binance Coin price crashes by 10% as SEC sues Binance and CEO Changpeng Zhao


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

PancakeSwap loses nearly 3% value intraday as the DEX crosses $1 billion in trade volume

PancakeSwap loses nearly 3% value intraday as the DEX crosses $1 billion in trade volume

Decentralized exchange (DEX) PancakeSwap (CAKE) announced in an official tweet that it has crossed $1 billion in trade volume on the Layer 2 chain, Base. CAKE on-chain metrics support the thesis of a recovery in the DEX token’s price. 

More Cryptocurrencies News

Shiba Inu hits new milestone, over $9 billion worth of SHIB tokens burnt

Shiba Inu hits new milestone, over $9 billion worth of SHIB tokens burnt

Shiba Inu (SHIB), the second-largest meme coin in the crypto ecosystem, recently hit a milestone in the volume of tokens burned. Shiba Inu has burnt over 410.72 trillion SHIB tokens since the inception of the burn mechanism in the project, worth over $9 billion.

More Shiba Inu News

Dogwifhat crashes 60%, but here's why you should not buy WIF yet Premium

Dogwifhat crashes 60%, but here's why you should not buy WIF yet

Dogwifhat (WIF) price shows a slowdown in the bearish momentum as it sets up a potential range. This development could lead to a good buying opportunity from a long-term perspective. 

More Dogwifhat News

XRP struggles to overcome $0.50 resistance, SEC vs. Ripple could enter final pretrial conference

XRP struggles to overcome $0.50 resistance, SEC vs. Ripple could enter final pretrial conference

XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court. 

More Ripple News

Bitcoin: BTC’s rangebound movement leaves traders confused

Bitcoin: BTC’s rangebound movement leaves traders confused

Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established. 

Read full analysis

BTC

ETH

XRP