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The SEC accused Binance — the world’s largest cryptocurrency exchange — of mishandling customer funds and failing to register under securities laws in a court filing released on Monday, June 5.
The SEC alleges that “First, Binance and BAM Trading, under Zhao’s leadership and control, have unlawfully offered three essential securities market functions—exchange, broker-dealer, and clearing agency—on the Binance Platforms without registering with the SEC. Acutely aware that U.S. law requires registration for these functions, Defendants nevertheless chose not to register, so they could evade the critical regulatory oversight designed to protect investors and markets.”
The SEC also claims Zhao and Binance were “intimately involved in directing BAM Trading’s U.S. business operations.”
“Zhao directed Binance to assist certain high-value U.S. customers in circumventing those controls and to do so surreptitiously because—as Zhao himself acknowledged—Binance did not want to ‘be held accountable’ for these actions,” the filing stated.
The SEC further alleges in the complaint that BNB, the native token of the Binance Smart Chain, is an unregistered security, and states the various Binance staking programs are also not in compliance with its registration requirements.
“We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk,” said Gurbir S. Grewal, director of the SEC’s enforcement division.
This is a breaking story.