The United States Securities and Exchange Commission (SEC) filed suit against Binance, its U.S. platform and CEO Changpeng Zhao (CZ) in the District Court for the District of Columbia on June 5.
4.
Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits.
We will issue a response once we see the compliant. Haven’t seen it yet. Media gets the info before we do.
— CZ Binance (@cz_binance) June 5, 2023
The U.S. regulator pressed 13 charges against Binance, including unregistered offers and sales of the BNB (BNB) and BUSD tokens, the Simple Earn and BNB Vault products and its staking program. In addition, the SEC alleges in the suit that Binance failed to register its Binance.com platform as an exchange or a broker-dealer clearing agency. Further, it claimed Binance and BAM Trading failed to register Binance.US as an exchange, broker and clearing agency. CZ was sued as a “controlling person.”
According to the suit:
“Defendants have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk. […] Defendants have engaged in multiple unregistered offers and sales of crypto asset securities and other investment schemes.”
It continued, “Defendants BAM Trading and BAM Management defrauded equity, retail, and institutional investors about purported surveillance and controls over manipulative trading on the Binance.US Platform, which were in fact virtually non-existent.”
Among the allegations behind the charges are claims that Binance failed to restrict U.S. investors from using Binance.com, And that Binance.US engaged in wash trading through its “primary undisclosed ‘market making’ trading firm Sigma Chain,” which is owned by CZ.
SEC chair Gary Gensler said in a statement:
“As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied.”
The SEC is demanding permanent enjoinment on Binance and CZ from further activities, disgorgement of ill-gotten gains with interest and financial penalties.
The suit claimed that tokens traded on the Binance exchange were securities. Those tokens are BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI.
Cointelegraph has reached out to Binance and Binance.US for its response to the suit, and will update when a statement is received.
This is a developing story, and further information will be added as it becomes available.
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