• The US SEC has sued Binance and Changpeng Zhao (CZ), the CEO of the cryptocurrency exchange, for breaking securities rules.
• The lawsuit alleges that Binance secretly allowed high-value U.S. customers to trade on the platform without registering with the US securities laws.
• SEC Chairman Gary Gensler stated that Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, among other charges.
SEC Sues Binance and CZ for Breaking US Securities Rules
The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, one of the world’s leading cryptocurrency exchanges, and Changpeng Zhao (CZ), its CEO, for breaking US securities rules. According to SEC Chairman Gary Gensler, through thirteen charges, they allege that CZ and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform as well as their affiliated market maker’s manipulative trading.
Charges Filed Against Binance
The regulatory agency is alleging that Binance secretly allowed high-value U.S customers to trade on their platform in violation of US securities laws which prohibits unregistered exchanges from serving US customers. Furthermore, they claim CZ exercised control over customer assets by commingling them with personal and company holdings.
Repercussions of This Latest Development
This latest development comes two weeks after the SEC sued another major crypto exchange, Bittrex, and its ex-CEO William Shihara for violating securities laws. Additionally, Kraken and Coinbase have also recently been taken to task by the regulatory agency for similar issues. As a result of this news Bitcoin has lost more than 2% of its value so far today which could lead it dropping below $26k soon following this news.
What Has Been Said About This Case?
SEC Chairman 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.“ He continued to say „As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform.“
What Will Happen Now?
It remains unclear what will happen now but it is likely we will see further developments in this case soon as both sides present more evidence in court or reach an out-of-court settlement before then should both parties be willing to negotiate one such agreement