SEC Sues Binance and Founder Changpeng Zhao

investopedia.com:

Binance is facing accusations from the U.S. Securities and Exchange Commission (SEC) that it knowingly operated unregistered exchanges.

The SEC filed a lawsuit against Binance Holdings Ltd., BAM Trading Services Inc., and founder Changpeng Zhao on Monday for violating U.S. securities laws.The counts mentioned in the complaint include allegations of operating unregistered exchanges, misrepresenting trading controls and oversight on the Binance.US platform, and engaging in the unregistered offer and sale of securities.

In its complaint, the SEC asserts Binance and BAM Trading, which operates the Binance.US platform with Binance, operated as unregistered exchanges, brokers, dealers, and clearing agencies, earning at least $11.6 billion in revenue, mostly from transaction fees.

The regulator also said in its complaint Binance broke U.S. laws because of the unregistered offer for sale of its own BNB token and BUSD stablecoin, some crypto-lending products and offering staking-as-a-service.

The SEC also claims Zhao and Binance allowed high-value U.S. customers to secretly continue trading on Binance.com, despite publicly stating otherwise. In 2019, Binance stopped serving U.S. customers and set up Binance.US along with BAM Trading to meet U.S. regulatory standards.

Furthermore, the SEC alleges that Binance.US, touted as an independent platform for U.S. investors, was actually controlled by Zhao and Binance behind the scenes.

Additionally, the complaint accuses BAM Trading and BAM Management of misleading investors about trading controls on the Binance.US platform, which allegedly led to the commingling of customer funds with an outside entity controlled by Zhao and wash trading on Binance.US by a trading firm owned by Zhao.

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