The U.S. Securities and Exchange Commission (SEC) has charged global crypto exchange Binance, along with its US counterpart Binance.US, and its CEO, Changpeng “CZ” Zhao of multiple breaches of U.S. securities laws, triggering waves of uncertainty across the global crypto community.
The U.S. Charge vs Binance
- The SEC’s lawsuit alleges that Binance, Binance.US, and CZ offered unregistered securities to the public, including the BNB token and Binance-linked BUSD stablecoin.
- These digital assets have not been registered according to the laws that oversee traditional financial securities, which is what led to the filing of the lawsuit, the U.S. claimed.
- Despite publicly stating otherwise, the SEC alleges that Binance allowed US-based individuals to conduct trades on its platform.
- The suit goes a step further accusing Zhao and Binance of aiding specific high-value U.S. clients in bypassing controls meant to prevent U.S. customers from accessing the platform.
The U.S. SEC also said Binance’s staking service, a feature that allows users to earn rewards by participating in the network of a particular cryptocurrency, violated securities laws. Binance, therefore failed to register as a clearing agency, a broker, and an exchange, as required by U.S. laws.
U.S. SEC Alleges Binance Mixed Customer Funds
The suit also alleged that Binance allowed the mixing of customer funds:
- The lawsuit asserts that Binance and CZ did not adhere to financial controls, which resulted in customer funds being diverted potentially for personal use.
- It is also alleged that Zhao was secretly controlling Binance.US, despite the company’s statements that it is independent from the Binance CEO.
- Furthermore, an entity owned and operated by Zhao is claimed to have inflated Binance.US’s trading volume artificially.
SEC Classifies More Coins as Security Tokens
The following tokens were labeled securities in the suit.
Curiously, ETH was not labeled a security in the suit.
Binance Denies U.S. SEC Allegation
- Binance.US has responded to the lawsuit, vehemently denying the accusations and referring to them as “baseless.”
- The company insists that it’s committed to ensuring user assets safety and will staunchly defend against any allegations to the contrary.
- Note that Binance already has another suit, brought up by the Commodity Futures Trading Commission (CFTC) earlier this year.
This is a developing story.
This article is published on BitPinas.com: US SEC Charges Binance, CZ, for Operating an Illegal Crypto Exchange
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