5 key highlights of the SEC’s lawsuit against Binance
The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance on June 5, alleging that the exchange was involved in the sale of unregistered securities. In its 136-page complaint, the SEC accuses Binance and its founder, Changpeng “CZ” Zhao, of participating in a complex conspiracy that involved fraud, conflicts of interest, a lack of disclosure and willful disregard for the law.
The claims, according to SEC Chair Gary Gensler, center on deceiving investors about risk controls, tampering with trade volumes, hiding crucial operational data, and flouting U.S. securities laws. In order to avoid regulatory scrutiny, Binance allegedly created weak controls while secretly disobeying them to keep its highly valuable U.S. customers.
Today we charged Binance Holdings Ltd. (Binance); U.S.-based affiliate, BAM Trading Services Inc., which, together with Binance, operates https://t.co/swcxioZKVP; and their founder, Changpeng Zhao, with a variety of securities law violations.https://t.co/H1wgGgR5ir pic.twitter.com/IWTb7Et86H
Here are the key highlights from the SEC’s complaint:
According to the SEC, Changpeng Zhao has been operating Binance.com and Binance.US as exchanges, brokers, dealers and clearing agencies since at least July 2017. The complaint claims that these companies have earned at least $11.6 billion through a variety of methods, including transaction fees collected from American clients.
According to the SEC's complaint, Binance.com should have registered as a clearing agency, broker-dealer and exchange, while Binance.US and BAM Trading should have registered as clearing agencies and exchanges, respectively. BAM Trading also needed to register as a broker-dealer, and it was charged with the unregistered
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