com to be regulated ever," the SEC alleged that Binance's chief compliance officer admitted. The SEC alleged that Zhao designed and implemented a plan to "surreptitiously evade U.S. The exchange, however, says it does not have a headquarters and has declined to state the location of its main exchange. The holding company of Binance, founded in Shanghai in 2017 by CEO Zhao, a Canadian citizen who was born and raised until the age of 12 in China, is based in the Cayman Islands. Zhao called those an "incomplete recitation of facts."īinance is also under investigation by the Justice Department for suspected money laundering and sanctions violations, according to people familiar with the probe. Commodity Futures Trading Commission (CFTC) in March for operating what the regulator alleged were an "illegal" exchange and a "sham" compliance program.
BINANCE LEGAL IN US SERIES
The SEC complaint is the latest in a series of legal headaches for Binance, which was also sued by the U.S. "I think that there's a big risk here that this could be crippling to Binance," said Ed Moya, senior market analyst at Oanda. Binance dominates crypto trading, last year processing trades worth about $65 billion a day with up to 70% of the market. Market players said the SEC's allegations could hobble Binance, with the lawsuit likely to reverberate through the crypto industry. Binance's own cryptocurrency BNB, the world's fourth-largest by market size, dropped more than 5%.
"All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure," the blog post said.īinance.US, which is ultimately controlled by Zhao, said in a tweet that the lawsuit was "unjustified by the facts, by the law, or by the Commission's own precedent."īitcoin, the world's biggest cryptocurrency, fell as much as 6% on the news to its lowest in almost three months. exchange, the SEC's actions are limited in reach." In a blog post, Binance said: "We intend to defend our platform vigorously," adding that "because Binance is not a U.S. "We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law," SEC Chair Gary Gensler said in a statement. federal securities laws," the SEC also alleged, citing a number of practices first reported by Reuters in a series of investigations into the exchange published this year and in 2022.įrom almost three years ago until June 2022, a trading firm owned and controlled by Zhao, Sigma Chain, engaged in so-called wash trading that artificially inflated the trading volume of crypto asset securities on the Binance.US platform, the SEC also alleged. entities "as part of an elaborate scheme to evade U.S. The SEC also claimed that Binance and Zhao, its billionaire founder and one of the crypto industry's highest-profile moguls, secretly controlled customers' assets, allowing them to commingle and divert investor funds "as they please."īinance created separate U.S.
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