On June 5, the U.S. Securities and Exchange Commission (SEC) accused Changpeng Zhao, founder and CEO of cryptocurrency exchange Binance, the operator of Binance US, for violating federal securities laws. sued on suspicion.
The offering of Binance Coin (BNB) and stablecoin Binance USD (BUSD) constitutes offering unregistered securities, and the staking service violates securities laws.
In addition, BAM Trading (operating company of Binance US) and Binance itself have been sued for failing to register as a clearing house, failing to register as an intermediary, and failing to register as an exchange. The SEC also alleges that Binance admitted to commingling customer funds, that Mr. Zhao had “covertly” controlled Binance.US, and that entities owned and operated by Zhao inflated Binance.US’ trading volume. It is said that
The complaint also states multiple times that Binance does not allow US citizens or residents to trade on its platform, when in fact it does.
“As the second step in Mr. Zhao and Binance’s plan to hide from US regulation, they consistently profess that Binance.com does not serve Americans, while at the same time the most valuable US It covered up efforts to keep human customers trading on the platform.”
“When Binance US launched in 2019, Binance announced that it was implementing controls to block American customers from Binance.com. In reality, Binance did the opposite. He assisted certain high-value American clients in circumventing these controls and instructed Binance to do so in secret, and as Zhao himself admitted, Binance “wouldn’t want to be held responsible” for these actions. I was thinking, ‘No.’”
SEC has also announced that Solana (SOL), Cardano (ADA), Polygon (MATIC), Coti (COTI), Algorand (ALGO), Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), Axy・Many crypto assets, such as Infinity (AXS) and Decentraland (MANA), claim to be securities.
The complaint alleges that Binance’s chief compliance officer told another employee in 2018, “We operate as an unlicensed stock exchange in America.”
Today we charged Binance Holdings Ltd. (Binance); US-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
— US Securities and Exchange Commission (@SECGov) June 5, 2023
The SEC is asking Binance, Binance US, and “their respective agents,” among others, to stop violating federal law and to waive “unfairly earned profits” with interest.
We also want to ban Mr. Zhao from serving as an officer or director of any securities issuer and block Binance, Binance US and Mr. Zhao from participating in or trading in any securities “including cryptocurrency securities.”
This would also include blocking defendants from operating as unregistered brokers, clearinghouses or exchanges dealing in any cryptocurrency securities, the complaint notes.
｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
｜Original: SEC Sues Crypto Exchange Binance and CEO Changpeng Zhao, Alleging Multiple Securities Violations
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