The US Securities and Exchange Commission (SEC) has accused Binance Holdings and its founder Changpeng Zhao for breaking US rules
The two entities charged by the US SEC include Binance Holdings Ltd, which is the parent company for the wider group and BAM Trading Services Inc., which operates the Binance.US trading platform.
The SEC filed 13 charges against Binance entities and founder Changpeng Zhao, also known as CZ.
The charges include operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities.
CZ, a serial entrepreneur, launched Binance in July 2017 and within 180 days, grew Binance into the largest digital asset exchange in the world by trading volume, according to its website.
Among other things, the SEC alleges that, while CZ and Binance publicly claimed that US customers were restricted from transacting on Binance.com, CZ and Binance subverted their own controls to secretly allow high-value US customers to continue trading on the Binance.com platform, the US regulator said in a statement on its website.
Further, the SEC alleges that, while CZ and Binance publicly claimed that Binance.US was created as a separate, independent trading platform for U.S. investors, CZ and Binance secretly controlled the Binance.US platform’s operations behind the scenes.
CZ said his team will review the complaint. "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 tweeted.
Binance has issued a response to the SEC's complaint.
"We are disappointed that the US SEC chose to file a complaint today against Binance seeking, among other remedies, purported emergency relief. From the start, we have actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns," Binance said in a statement.
"Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations. But despite our efforts, with its complaint today the SEC abandoned that process and instead chose to act unilaterally and litigate. We are disheartened by that choice," the statement said.
"Any allegations that user assets on the Binance.US platform have ever been at risk are simply wrong, and there is zero justification for the Staff’s action in light of the ample time the Staff has had to conduct their investigation," the statement noted, adding "All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary."
(Reporting by Seban Scaria; editing by Daniel Luiz)