The US Securities and Exchange Commission (SEC) announced late Monday that it has filed 13 charges against Binance and its founder Changpeng “CZ” Zhao, but the cryptocurrency exchange said the SEC’s intent is “to make headlines,” and its actions are limited in reach.
The regulator charged Binance Holdings Ltd, its US-based affiliate, BAM Trading Services Inc, which, together with Binance, operates the crypto asset trading platform, Binance.US, and their founder, Changpeng Zhao, with various securities law violations.
These alleged violations include allowing high-value US customers to continue trading on the Binance.com platform, despite claiming US customers were restricted from trading on Binance.com. In addition, they state Zhao and Binance “secretly controlled” Binance.US even though they claimed it was a separate, independent trading platform for US investors, while they also believe Zhao and Binance have control of customers’ assets, allowing them to mix the assets or divert them as they please.
Other allegations include Binance operating unregistered national securities exchanges, broker-dealers, and clearing agencies and the crypto exchange offering the sale of various unregistered securities, such as Binance’s own crypto assets, including exchange token BNB, Binance USD (BUSD), and a staking-as-a-service program.
SEC Chair Gary Gensler said:
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.”
He adds that Zhao and Binance “misled investors” about risk controls and corrupted trading volumes while “actively concealing who was operating the platform.”
He continued:
They attempted to evade US securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value US customers on their platforms.”
In response to the claims on Monday, Binance issued a statement denying the charges, declaring they are disappointed and have “actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns.”
The crypto exchange said it would defend its platform vigorously, adding that the SEC’s refusal to productively engage with the platform is another example of its “misguided and conscious refusal” to provide clarity and guidance to the digital asset industry.
“The SEC’s real intent here, instead, appears to be to make headlines,” argues Binance. The company said it will continue to cooperate with regulators and policymakers in the US and globally but acknowledged that “because Binance is not a US exchange, the SEC’s actions are limited in reach.”
Having gained a degree in economics, Alan entered the world of financial services starting his career in London and then moving to New York for a number of years. His first post at a City bank saw him establish a reputation as an forex trader. Having recently returned from New York after eight successful years, Alan is now a prosperous trader in his own right concentrating on commodities and forex.
