The SEC accuses CEO Changpeng Zhao and cryptocurrency exchange Binance of multiple securities violations.
On Monday, the U.S. Securities and Exchange Commission filed a lawsuit against Binance, the operating corporation for Binance.US, and Changpeng “CZ” Zhao, the business’s founder and CEO, for allegedly breaking federal securities laws.The lawsuit claims that Binance’s staking service breached securities law and that Binance, Binance.US, and CZ provided unregistered securities to the general public in the form of the BNB token and Binance-linked BUSD stablecoin.Similar accusations include failing to register as a clearing agency, a broker, or an exchange against BAM Trading, the business that runs Binance.US, as well as against Binance itself. The lawsuit also claimed repeatedly that Binance has denied allowing U.S. persons—defined as U.S. citizens or residents—to trade on its platform.The lawsuit claimed that as part of Zhao and Binance’s strategy to avoid being subject to U.S. regulation, they “consistently claimed to the public that the Binance.com Platform did not serve U.S. persons, while concealing the efforts to ensure that the most valuable U.S. customers continued trading on the platform.”“In 2019, when the Binance.US Platform became live, Binance said that it was putting in place measures to keep US consumers off the Binance.com Platform.In fact, Binance took the opposite action.Zhao gave Binance instructions to assist some valuable U.S. customers in getting over those restrictions. The SEC complaint adds to claims made by the Commodity Futures Trading Commission (CFTC) in March of this year that Binance and its founder Changpeng Zhao knew they were breaking the law by offering unregistered crypto derivatives products in the United States.The CFTC’s complaint and many of the SEC’s claims are similar. A SEC representative wrote in an email last week, “We do not comment on the existence or nonexistence of a potential investigation or enforcement action.”On Monday, inquiries for comment were not immediately responded to by the SEC or Binance officials.CZ tweeted “4” in response to the news, effectively referring to it as “fud” (fear, uncertainty, and doubt).
