American financial regulator the US Securities and Exchange Commission is suing the world’s largest cryptocurrency exchange Binance and its founding CEO.
The SEC alleges that Changpeng Zhao and his company knowingly mixed customer funds, sending them to a separate company “to enrich themselves by billions of US dollars while placing investors’ assets at significant risk”.
“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,” said Gurbir Grewal, director of the SEC’s enforcement division.
Binance earned at least $11.6bn (£9.3bn) in revenue between June 2018 and July 2021, according to the allegations.
The complaint also alleges that Binance unlawfully solicited US investors to trade crypto asset securities on its platforms, engaging in unregistered offers and sales of securities and making false representations regarding surveillance and controls over manipulative trading.
Zhao, Binance Holdings, BAM Trading Services and BAM Management US Holdings face 13 civil charges. They include accusations that Binance artificially inflated trading volume on its Binance.US and allowed high-value investors in the US to use the platform despite not possessing an SEC licence to do so.
A Binance spokesperson said: “We want to be clear that while we take the allegations in the SEC’s complaint seriously, they should not be the subject of an SEC enforcement action, let alone on an expedited basis. They are unjustified.”
