Key events
Binance says allegations are ‘simply wrong’ and vows to ‘vigorously defend’ itself
Here’s more from Binance on the SEC lawsuit. The company has rejected allegations that customer funds were at risk as “simply wrong”.
The company also vowed to “vigorously defend” itself against the claims.
The statement added: “All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary.”
What the SEC is accusing Binance of
The US Securities and Exchange Commission has filed a total of 13 charges against Binance in US federal court. The core of the SEC’s complaint against Binance and CEO Changpeng Zhao is that the company knowingly skirted US regulations and deceived US investors and regulators about how it was operating its exchange.
The SEC says that Zhao and Binance, which was founded in Shanghai but has since moved out of China after the country banned cryptocurrency trades, falsely claimed the exchange banned US customers when in fact the company was secretly allowing traders access to the exchange. Binance said it created Binance.US, a separate, independent trading platform specifically for US investors, Zhao and Binance was controlling the entity behind the scenes.
The complaint says that Zhao and Binance exercised unlawful control over customer funds, including diverting them to outside entities that were also owned by Zhao, including one called Sigma Chain. Binance “misled” investors about trading control the company said it offered on the Binance.US platform and instead diverted funds to Sigma Chan. With the diverted funds, Zhao and Binance “engaged in manipulative trading” that led to an artificial increase in the platform’s trading value. It also diverted money to another Zhao-owned trading firm, Merit Peak Limited.
Other charges encompass broader accusations against Binance for operating in the US as an unregistered national securities exchanges.
The US Securities and Exchange Commission has filed a lawsuit against Binance, the world’s largest cryptocurrency exchange, and its CEO, Changpeng Zhao, accusing the company and Zhao of operating an illegal cryptocurrency exchange using billions of dollars in Binance customer funds.
This is the biggest crackdown of the cryptocurrency exchange and will likely cause a rumble in the cryptocurrency world, which was shaken by the collapse of FTX in the fall, what was the second-largest exchange to Binance.
“Through 13 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 law,” SEC head Gary Gensler said in a statement.
In its own statement on its website, Binance denounced the lawsuit saying that the company has been been “actively cooperating” with the investigation and “worked hard to answer their questions and address their concerns”.
“Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigation,” the statement said. “Despite our efforts, with its complaint today the SEC abandoned that process and instead chose to act unilaterally and litigate.”
The company said it plans to “defend our platform vigorously”.
This is Lauren Aratani in New York. We’ll be covering new developments and reactions around Binance, so stay tuned.
