Binance Holdings Ltd., and its US affiliates, are being charged by the US Securities and Exchange Commission for multiple offenses, months after being charged separately by another US regulator.
The SEC’s case stems from the defendants’ “blatant disregard of the federal securities laws,” the regulator said.
“In so doing, Defendants have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk,” the SEC said in its complaint.
The world’s largest crypto exchange and its founder Zhao, also known as CZ, are being accused of “engaging in multiple unregistered offers and sales of crypto asset securities and other investment schemes.”
The exchange and CZ are facing a total of 13 charges.
“As alleged, 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,” said SEC Chair Gary Gensler in a statement. “They attempted to evade U.S. securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value U.S. customers on their platforms.”
Binance and BAM Trading, doing business as Binance.US, under Zhao’s leadership, were also unlawfully operating as an exchange, broker-dealer and a clearing agency without registering, the regulator alleged.
“Defendants nevertheless chose not to register, so they could evade the critical regulatory oversight designed to protect investors and markets,” the SEC said.
The agency also notably said two cryptocurrencies were securities — BNB and BUSD.
The news was first reported by Bloomberg News.
Binance was accused by the US Commodity Futures Trading Commission in March of allowing trading firms based in the US to trade crypto derivatives on Binance’s international exchange.
In a 74-age complaint, the CFTC said some of Binance’s entities had “commingled funds.”
The regulator also said CZ had directed employees and customers to circumvent compliance controls in order to maximize corporate profits.”
Binance did not immediately respond to a request for comment, but CZ tweeted the number “4,” which is his signal for showing he disagrees with something.
“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 said.
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