The SEC claims that Binance and its CEO Changpeng Zhao secretly control client assets, “allowing them to mix and divert them without control.”
A serious accusation has been made by the United States Securities and Exchange Commission (SEC ) against the world’s largest cryptocurrency exchange: Binance .
According to the filed lawsuit, Binance does not restrict US clients from its platform and misleads investors about its market surveillance controls, as well as to operate an unregistered exchange.
severe blow
In the lawsuit filed in Washington, Wall Street’s top regulator alleges the company acted in “blatant disregard” of US securities laws.
“Through 13 counts, we allege that the Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, failure to disclose, and calculated evasion of the law,” said SEC Chairman Gary Gensler.
The SEC also alleges that Zhao and Binance mixed client assets and even diverted some to an entity controlled by Zhao.
Binance says it is “disheartened” by the charges and maintains that it has engaged in “good faith” talks to reach a settlement.
Reuters researchers reported that Binance mixed $20 million from a corporate account with $15 million for another customer-facing account. The company denied the allegation, saying that the relevant accounts were only used to “facilitate” cryptocurrency purchases and that the funds were exclusively corporate.
the market moves
This type of news negatively affects the value of cryptocurrencies .
Bitcoin, the world’s most popular crypto asset and a benchmark for the broader digital asset industry, fell more than 5% on Monday, touching $25,000 per unit, according to CoinMarketCap.
Binance has long argued that it is not subject to US law because it does not have a physical US headquarters. Zhao claims the company’s headquarters are wherever he is at any time, “reflecting a deliberate approach to try to avoid regulation,” according to a secondary complaint from the Commodity Futures Trading Commission (CFTC).
US regulators have been intensifying their scrutiny of crypto platforms since the collapse of FTX, the exchange founded by Sam Bankman-Fried, in November last year.