The United States Securities and Exchange Commission (SEC) has filed charges against Binance, its U.S.-based exchange entity and its CEO, Changpeng Zhao, for violating securities laws.
On June 5, the SEC filed 13 charges against Binance in the U.S. District Court for the District of Columbia over allegations that the company misled investors and misused customer funds. The accusations of mishandling customers’ funds and violations of U.S. banking regulations were first flagged in a report published by Reuters in the last week of May. At the time, Binance had refuted all allegations, calling the report a list of conspiracy theories.
According to the regulator, Binance has been mixing "billions of dollars" in user assets and covertly moving them to a different firm under CZ's control. The accusations included misrepresenting to investors the effectiveness of the company's mechanisms for identifying and preventing manipulative trading.
Regulators further alleged that Binance had not done enough to prevent American investors from using its unlicensed exchange. Some of the key allegations in the lawsuit include:
The list of 13 charges against the crypto exchange by the SEC comes within months of another lawsuit filed by the U.S Commodity Futures Trading Commission (CFTC) in March invoked various reactions from the crypto community, the most prominent being the divide over Binance’s approach (Tai chi) and U.S regulators alleged “Operation Chokepoint 2.0”
The “Tai chi” reference comes from a 2020 Forbes report that alleged that Binance has incorporated a series of steps to evade regulators in the U.S. naming it as a “Tai Chi entity.” Tai Chi is a Chinese term used to describe a method to evade responsibility. At the time Binance
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