SEC charges Binance and CZ

Tue 06 Jun 2023 ▪ 3 min of reading ▪ by La Rédaction C.
Getting informed Centralized Exchange (CEX)

After the CFTC, it’s now the SEC’s turn to go after Binance and its founder Changpeng Zhao (CZ).

Binance Changpeng Zhao (CZ)

Binance and Changpeng Zhao targeted by the SEC 

The SEC has filed a lawsuit against Binance, the world’s largest exchange with over 200 million customers (Binance.com).

US subsidiary (BAM Trading Services) that operates Binance.US is also implicated, as well as Changpeng Zhao himself.

The SEC claims that Zhao and Binance did not prohibit US customers from trading on Binance.com, contrary to what had been publicly stated. Important US customers secretly obtained special privileges.

Although CZ and Binance publicly stated that Binance.US is a separate entity dedicated to US investors, the SEC alleges that CZ secretly controlled the operations of the Binance.US platform behind the scenes.

More concerning is that Zhao and Binance would exercise such control over the assets of US customers that they could “divert customer assets as they please, including to an entity Zhao owned and controlled called Sigma Chain.

The company Sigma Chain allegedly engaged in transactions aimed at artificially inflating trading volume on the exchange. Worse yet, CZ would have sent “billions of dollars of assets belonging to his clients to another company named Merit Peak, also owned by Zhao.

Binance is also accused of failing to comply with securities laws, particularly regarding the BNB and BUSD tokens, certain cryptocurrency lending products, and staking services.

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,” says Gary Gensler, SEC Chairman.

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.

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,” said Gurbir S. Grewal, Director of the Enforcement Division.

The noose tightens around the king of shitcoins. The BNB has been in free fall since the announcement of the lawsuit.

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La Rédaction C. avatar
La Rédaction C.

L'équipe éditoriale de Cointribune unit ses voix pour s’exprimer sur des thématiques propres aux cryptomonnaies, à l'investissement, au métaverse et aux NFT, tout en s’efforçant de répondre au mieux à vos interrogations.


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