Binance and its CEO Changpeng Zhao were sued by the regulators in the United States on Monday (June 5) for allegedly operating a “web of deception” and “calculated evasion of the law”.
The allegations piled further pressure on the world’s biggest cryptocurrency exchange and sent bitcoin to its lowest in almost three months.
News agencies reported that Binance allegedly permitted US residents to trade, even though the platform is not registered in the nation as a securities exchange. The case also alleges Binance misused customer funds.
A civil complaint listing 13 charges involving platforms and other investment entities controlled by founder Changpeng Zhao was filed by the Securities and Exchange Commission (SEC).
The SEC case is being followed closely after the charges in March by another US regulator, the Commodities Futures and Exchange Commission.
The allegations d levelled by SEC also claimed that Binance and Zhao secretly controlled customers’ assets, allowing them to commingle and divert investor funds “as they please”.
Billionaire Zhao is the founder of Binance and also one of the crypto industry’s highest-profile moguls. He was once seen as the archrival of disgraced crypto tycoon Sam Bankman-Fried.
The complaint noted that Zhao maintained that Binance.US was independent of Binance, but was “secretly controlled” by Binance “behind the scenes”.
The SEC said that the agency also alleged that Zhao and Binance “commingled” customer assets, including to another Zhao-controlled entity, Signa Chain, which “engaged in manipulative trading that artificially inflated the platform’s trading volume”.
SEC Chair Gary Gensler said, “Through thirteen charges, 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.”
“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.”
Zhao reacts to the allegations
Zhao said on Twitter that the Binance “team is all standing by, ensuring systems are stable, including withdrawals, and deposits”.
He added, “We will issue a response once we see the complaint. Haven’t seen it yet. Media gets the info before we do.”
4.
Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits.
We will issue a response once we see the complaint. Haven’t seen it yet. Media gets the info before we do.
????
— CZ ???? Binance (@cz_binance) June 5, 2023
(With inputs from agencies)
You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.
For all the latest business News Click Here
