The SEC said the new findings provide clear evidence of how Binance exercised tight control over Binance.US, despite both firms maintaining that they have always operated independently. Company messages show that Binance.US had to ask Chen’s team to process payments and cover the company’s payroll. The dealings between Binance and Merit Peak were first reported back in February, with records showing that more than $400 million was transferred from an account at California’s Silvergate Bank belonging to Binance.US to Merit Peak Ltd between late 2020 and March of 2021.īinance refuted the allegations at that time, with a spokesperson from Binance.US saying that the reports were based on “outdated information,” adding that “Merit Peak is neither trading nor providing any kind of services on the Binance.US platform,” and "only Binance.US employees have access” to the bank accounts in question.īinance mixed company and customer funds at Signature, funneled them into BUSD: ReportĪccording to a new report from Reuters, Guangying Chen, a close associate of CZ and senior Binance executive, was the main operator for five bank accounts belonging to Binance.US, which allowed Chen and her deputies to move funds held in the bank accounts. “Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.” We intend to defend our platform vigorously,” Binance said. “While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. authorities have asserted jurisdiction – only compounds these problems.” “Unilaterally labeling certain tokens and services as securities – even ones over which other U.S. “Today’s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology,” Binance said in a response to the SEC filing. The tokens identified include BNB Smart Chain (BNB), Binance USD stablecoin (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos Hub (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS,) and Coti (COTI). The filing also says that Binance concealed the fact that it commingled billions of dollars in customer assets that were sent to Merit Peak, another third-party entity owned by Zhao.Īs part of its lawsuit, the SEC has labeled 12 tokens as securities, but said that list is not exhaustive. The SEC has alleged that customer funds were illegally diverted to Sigma Chain, a trading entity controlled by Zhao, and used to engage in fraudulent trading that made Binance’s volume appear larger than it actually was. dollars while placing investors’ assets at significant risk.” “In so doing, Defendants have enriched themselves by billions of U.S. “This case arises from Defendants’ blatant disregard of the federal securities laws and the investor and market protections these laws provide,” the lawsuit said. “As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied.”Īccording to the court filing by the SEC, the regulator has charged Binance and its CEO with operating an illegal platform in the U.S. “Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” said SEC Chair Gary Gensler. crackdown on crypto intensified on Monday as the Securities and Exchange Commission (SEC) filed a lawsuit against Binance, the world's largest cryptocurrency exchange, and its CEO, Changpeng Zhao (CZ). Receive a comprehensive recap of the day's top stories directly to your inbox.
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