US regulators have accused Binance, the world’s largest cryptocurrency exchange, of violating the law by “changing client assets at will” and mixing them with others without any controls. The United States Securities and Exchange Commission (SEC) has filed a 13-count indictment against Binance and its founder and chief Changpeng Zhao. The SEC thus joins the offensive launched by the CFTC, the commodity markets regulator, which sued Binance and Zhao last March. The complaint has led to a massive drop in the price of bitcoin, ethereum and other cryptocurrencies.
The SEC claims that Binance received $11.6 billion in revenue from commissions received from US customer transactions, among other things, for which it was not properly registered. Those responsible for the forum declared themselves “disappointed” by the supervisor’s actions. “Any allegation that the assets of users of the Binance.US platform have ever been compromised is absolutely false,” the firm said in a statement.
The securities watchdog says Binance has “flagrantly violated the federal securities laws that protect investors and the market.” “Thus, the defendants have enriched themselves to the tune of billions of US dollars, while putting investors’ assets at significant risk,” it adds.
The complaint, filed in federal courts, alleges the platform, which called a subsidiary called Merit Peak Ltd. controlled by Zhao, extorted billions of dollars from customers. At one point in the 136-page lawsuit, the SEC estimated that $20 billion had been received from that firm. “Because Merit Peak was a supposedly independent entity, sending funds from Binance clients to Merit Peak exposed those funds to risks, including loss or theft, and was done without notifying clients,” the text says. Is.
The group’s operating structure, according to the SEC, “continues to give Zhao and Binance free rein to manage the billions of dollars in crypto assets that customers have deposited, held, traded and/or traded on Binance.” deposited on the platform. .US has no oversight or checks to make sure the property is adequately insured,” he says.
Following the fraudulent collapse of FTX and the downfall of its founder, Sam Bankman-Fried, authorities have targeted other markets that operated by taking advantage of legal loopholes or outright circumventing regulations. He has imposed various fines and filed lawsuits against various firms, of which this is perhaps the most far-reaching.
Binance has released a statement regarding the filing of the complaint. Those responsible declare themselves “disappointed”, assuring that they have cooperated with the supervisor and that they “participated in extensive discussions in good faith to reach a negotiated agreement to resolve their investigation”. “Despite our efforts, today with its complaint the SEC abandons that process and chooses to act unilaterally and prosecute. We are disappointed by this decision,” the note said.
“This is an attack on the whole region”, Tweeted its founder, that makes sure you are withdrawal permission For customers who are requesting it.
One of the allegations from the stock market watchdog is that the firm did not take adequate measures to avoid targeting US investors, thereby violating regulations. According to the SEC, while Zhao and Binance publicly claimed that US customers were prohibited from trading on Binance.com, they actually reversed their own controls to allow larger customers to continue trading. Gave.
“Throughout the 13 counts, we allege that Zhao and Binance engaged in a widespread network of fraud, conflict of interest, non-disclosure and evasion of law,” SEC Chairman Gary Gensler said in a statement. ” “As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes, while actively concealing who operated the platform, the manipulative trading of their affiliated market makers, and As far as where and with whom the money was being held. Investor funds and crypto assets.”
According to Gensler, Binance and its founder “attempted to circumvent US securities laws by announcing fictitious controls, which they ignored behind the scenes in order to retain high-value US customers on their platform.” “The public should be wary about investing any of their hard-earned money with or in these illegal platforms,” he added.
The Futures Markets Commission (CFTC) has already accused the firm, its founder and head of regulatory compliance, of evading regulation, which requires operations with futures and derivatives on commodities and other assets to be carried out through regulated markets. it occurs. Giving instructions on how to break the law by using the Signal app with automatically deleted messages, Zhao said, “Don’t put anything in writing.”
Binance contemplated the purchase of bankrupt FTX and is one of the great promoters of crypto assets around the world. Although Binance said it was staying out of the US market, it was a lie, according to a lawsuit filed by the CFTC, which claimed the platform offered and executed derivatives trades to US customers. The CFTC claimed, “Under direction from Zhao, Binance instructed its employees and customers to circumvent compliance controls in order to maximize corporate profits.”
Binance has been a target of the US authorities for years. Following the fall of FTX, observers are tightening vigilance. Coinbase reached a settlement in January to pay a $50 million fine for lacking anti-money laundering controls and other deficiencies. The Securities and Exchange Commission (SEC) has sanctioned and opened files on several firms in this sector as well as celebrities who secretly advertised crypto assets.
One of the big ones to fall was Genesis, a cryptocurrency firm that was recently accused of irregular practices by the SEC and that had already blocked withdrawals of client funds last November. In January he made good forecasts and declared bankruptcy.
Follow all the information on economy and business on Facebook and Twitteror in our weekly newsletter
five day agenda
Most important economic appointments of the day, with keys and context to understand their scope.
get it in your mail
