US sues cryptocurrency exchange Binance and Changpeng Zhao for 'fraud'

13 Charges Against Binance

The Securities and Exchange Commission (SEC) complaint, filed in federal court in Washington, lists as many as 13 allegations against Binance, Zhao and the supposedly independent US exchange operator.

Changpeng Zhao, founder and CEO of the world's largest cryptocurrency exchange Binance. Photo: Reuters

Specifically, the SEC alleges that Binance artificially inflated trading volumes, diverted customer funds, failed to protect US customers, and misled investors.

The SEC also claims that Binance and Zhao, its billionaire founder and one of the crypto industry's most prominent tycoons, secretly controlled customer assets, allowing them to use the funds "at will."

Binance created separate US entities “as part of an elaborate scheme to evade US federal securities laws,” the SEC further alleged, pointing to a series of other violations.

“We allege that Zhao and Binance entities engaged in a vast web of fraud, conflicts of interest, lack of transparency, and calculated evasion of the law,” SEC Chairman Gary Gensler said in a statement.

“We intend to vigorously defend our platform,” Binance said in a blog post, adding that “as Binance is not a US exchange, the SEC’s actions are limited in their reach.”

“All user assets on Binance and its affiliate platforms, including Binance.US, are safe and secure,” the blog post said. In the statement, Binance also said it has “actively cooperated” with the SEC “from the beginning” and “respectfully disagrees” with the SEC’s allegations.

Binance.US, controlled by Zhao, said in a tweet that the lawsuit was “unjustified by the facts, by law, or by Commission precedent.”

Bitcoin, the world's largest cryptocurrency, fell as much as 6% in value on the news to its lowest level in nearly three months. Binance's own cryptocurrency, BNB, the world's fourth-largest by market capitalization, fell more than 5%.

Market participants said the SEC's allegations could be difficult for Binance and the cryptocurrency market in general. Binance dominates cryptocurrency trading, processing about $65 billion worth of trades per day last year.

“I think there’s a big risk here that this could cripple Binance,” said Ed Moya, senior market analyst at Oanda.

A series of other legal allegations

The SEC lawsuit is just the latest in a series of legal challenges Binance has faced recently. The exchange was sued by the US Commodity Futures Trading Commission (CFTC) in March for operating an “illegal” and “sham” exchange. Billionaire Zhao denies the allegations.

Changpeng Zhao, also known as "CZ" and just 45 years old, got rich quickly during the boom of the cryptocurrency market. Photo: Bitcoin

Binance is also being investigated by the US Justice Department for suspected money laundering and sanctions violations, according to people familiar with the investigation.

Binance, headquartered in the Cayman Islands, was founded in Shanghai in 2017 by Zhao, a Canadian citizen who was born and raised in China until he was 12. The exchange said it has no headquarters and did not specify the address of its main exchange, Binance.com.

In May, Reuters reported that Binance had mixed customer funds with company revenue, among other allegations of wrongdoing. Binance denied mixing customer deposits with company funds.

Earlier, Binance's French branch and parent company Binance Holdings Limited were also sued by 15 investors in France for misleading commercial practices and fraudulent concealment.

Changpeng Zhao, commonly known as “CZ,” has emerged as one of the world’s fastest-growing billionaires. His net worth reached $96 billion at the end of last year, putting him on par with other top billionaires like Mark Zuckerberg, Elon Musk, and Warren Buffett.

Huy Hoang (according to Reuters, Cointelegraph)

Source: https://www.congluan.vn/my-kien-san-tien-dien-tu-binance-va-ty-phu-changpeng-zhao-ve-toi-lua-dao-post250502.html