The US Securities and Exchange Commission (SEC) has filed a lawsuit against the Binance bitcoin exchange and its CEO Changpeng Zhao.
The US regulator has filed 13 allegations, including unregistered offerings and sales of BNB (BNB) and BUSD tokens, Simple Earn and BNB Vault products, and staking.
The lawsuit also alleges that Binance failed to register its Binance.com platform as an exchange, broker-dealer or clearing agency, just like the US division. Zhao was sued as a “controlling person”.
The SEC has also qualified the following assets as securities: SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, and AXS.
“Defendants illegally solicited U.S. investors to buy, sell, and exchange crypto-assets securities through unregistered trading platforms available online at Binance.com and Binance.US,” the lawsuit states.
A press release from the agency indicated that Zhao and his company controlled the assets of clients, mixed and redirected them “at their discretion.” According to the SEC, the top manager “secretly controlled” the American branch. Earlier, a similar conclusion was published by Reuters.
“They tried to circumvent US securities laws by announcing fictitious controls that they ignored in order to keep valuable US customers on their platforms,” said SEC Chairman Gary Gensler.
The regulator demanded a permanent ban on further activities for Binance and Zhao, the seizure of illegally obtained income with interest, and financial sanctions.
“Our entire team is at the ready, ensuring the stability of systems, including withdrawals and deposits,” Zhao emphasized.
Binance representatives said they were disappointed with the SEC’s decision to file a lawsuit against the company. According to the announcement, the exchange intends to protect its business, and the Commission’s departure from “productive interaction” is “an example of a mistaken and deliberate failure” to provide clarity in the regulation of the industry.
Our response to the SEC’s complaint.https://t.co/mgXxGTKr67
— Binance (@binance) June 5, 2023
Against this backdrop, BNB collapsed from around $300 to levels near $280. Over the past day, the asset has lost 7.7%, according to CoinGecko.
In March, a lawsuit against Binance and Zhao filed CFTC. According to the agency, the platform violated the rules for trading derivatives by operating without proper registration and “deliberately evading US law.”
In response to the accusations, Zhao said that the Commission’s claims contain “an incomplete statement of the facts” and his company disagrees with the characterization of many of the points.
The head of the regulator, Rostin Benham, later clarified that Binance intentionally violated the established rules.
Recall that in March, the exchange denied the information in the Reuters material with the statement about the mixing of user funds and income in 2020 and 2021.
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