Binance Holdings Ltd, a global cryptocurrency exchange, along with its founder Changpeng Zhao, have been charged by US Securities and Exchange Commission (SEC) over infringement of different security laws.
Insights from the SEC website stated that Zhao and Binance didn’t live up to their public commitment of preventing US customers from trading on Binance.com. “Among other things, the SEC alleges that, while Zhao and Binance publicly claimed that U.S. customers were restricted from transacting on Binance.com, Zhao and Binance in reality subverted their own controls to secretly allow high-value U.S. customers to continue trading on the Binance.com platform,” the website highlighted. SEC has also accused Zhao and Binance for privately running Binance.US platform, despite claiming it to be a separate trading entity.
From what it’s understood, SEC has charged Binance for contravention of “critical registration-related provisions of the federal securities laws.” With regard to the complaint’s context, Binance and BAM Trading Services, a cryptocurrency-based marketplace, have been running unregistered national securities exchanges, broker-dealers, and clearing agencies. The complaint further stated that the two platforms conducted unregistered transactions around Binance’s own crypto assets, along with Zhao being responsible for their base of operations.
“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. As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied. They attempted to evade U.S. securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value U.S. customers on their platforms. The public should beware of investing any of their hard-earned assets with or on these unlawful platforms,” Gary Gensler, chairperson, US SEC, said.
In concluding parts of the complaint, SEC mentioned four sub topics under which Binance has been charged for different violations, them being “UNREGISTERED EXCHANGE, BROKER, AND CLEARING AGENCY,” “UNREGISTERED OFFER AND SALE OF CRYPTO ASSETS,” “FAILURE TO RESTRICT U.S. INVESTORS FROM ACCESSING BINANCE.COM,” and “MISLEADING INVESTORS.”
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