REGULATION

SEC accuses Binance Holdings and Changpeng Zhao of violating securities laws, BNB falls below recent lows, CZ responds

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SEC accuses Binance Holdings and Changpeng Zhao of violating securities laws, BNB falls below recent lows, CZ responds

The U.S. Securities and Exchange Commission (SEC) today filed multiple securities law violation charges against Binance, the world's largest cryptocurrency exchange, its U.S. affiliate BAM Trading Services Inc. (BAM Trading), and founder Changpeng Zhao.

Previously: The Commodity Futures Trading Commission (CFTC) also sued Binance and founder Changpeng Zhao in March.

Binance Bypasses Regulation to Allow U.S. Customers to Trade

The SEC alleges that, despite Zhao Changpeng and Binance publicly stating that U.S. customers were restricted to trading on Binance.com, they secretly circumvented the restriction, allowing high-net-worth U.S. customers to continue trading on the Binance.com platform.

The SEC even quoted Binance's compliance officer in 2018 stating, "We are running a U.S. securities exchange unregistered, bro~"

Secret Control Behind Binance.US

The SEC alleges that, despite Zhao Changpeng and Binance publicly claiming that Binance.US was an independent trading platform created for U.S. investors, Zhao Changpeng and Binance secretly controlled the operation of the Binance.US platform behind the scenes.

SEC lawsuit documents show Zhao Changpeng's ownership relationships

Zhao Changpeng and Binance Exercising Control Over Customer Assets

The SEC also alleges that Zhao Changpeng and Binance exercised control over customer assets on the platform, commingling customer assets or transferring customer assets according to their own wishes, including transferring to an entity called Sigma Chain owned and controlled by Zhao Changpeng.

Violation of Important Registration Terms: BNB, BUSD Noncompliance

The SEC's complaint also accuses Binance and BAM Trading of operating an unregistered national securities exchange, broker-dealer, and clearing agency. Additionally, Binance and BAM Trading allegedly issued and sold their own cryptographic assets, including BNB and BUSD, without registration, while also alleging Zhao Changpeng's involvement in the noncompliant operations as a controlling person.

Binance Offering Securities Trading: BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, COTI

The SEC believes that Binance offering and selling cryptographic assets that constitute "investment contracts" constitutes a type of security. These assets circulating in the U.S. on Binance constitute trading in unregistered securities. The SEC meticulously explains why these listed cryptocurrencies constitute securities. Example: Reasons BUSD is considered a security

Zhao Changpeng and Binance Accused of Defrauding Investors

The SEC accuses BAM Trading and BAM Management of misleading investors in the trading volume of cryptographic assets on the Binance.US platform. The complaint also alleges that the market maker Sigma Chain on the Binance.US platform engaged in false trading, further demonstrating BAM Trading's false statements regarding market monitoring and control.

The case will be heard in the U.S. District Court for the District of Columbia, listing multiple securities law violations in the complaint. The unfolding of this case signifies that Binance and Zhao Changpeng will face legal scrutiny and corresponding penalties.

BNB Plummets on News, CZ Responds: 4

Upon this news, Binance's native token BNB fell below 300 within an hour, reaching a low not seen since March. Binance founder Zhao Changpeng responded:

"4 means don't panic, our team has been preparing to ensure system stability, including withdrawals and deposits.

Once we see the complaint, we will respond. We have not seen the complaint yet. The media always gets the news before us." Later, Binance issued an official response