- The exchange and its CEO are accused of violating U.S. securities regulations
- A spokesperson for the SEC declined to comment
- Binance plunged about 3% on the news
The Securities and Exchange Commission sued the cryptocurrency exchange Binance and its CEO Changpeng Zhao on Monday, June 5. They are accused of violating federal securities laws.
According to various news sources, the Securities and Exchange Commission (SEC) reports that Binance, among other things, operated an unlicensed exchange. The company has also been accused of lying to regulators and investors about its operations.
Regulators said Binance mixed “billions of dollars” in customer funds and secretly sent them to a separate company controlled by CZ.. In addition, the charges allege that Binance engaged in deception regarding the adequacy of its systems to detect and monitor manipulative trading for investors. Regulators allege that Binance failed to implement sufficient measures to limit U.S. investors’ access to the unregulated Binance exchange.
A spokesman for the SEC said:
“We do not comment on the existence or non-existence of a possible investigation or enforcement action.”
CZ also reacted almost immediately to the news of the lawsuit. On his Twitter, he posted the number 4, which means ignore FUD and wrote:
“Our team is ready to monitor system stability, including withdrawals and deposits. We will give an answer when we see compliance. Haven’t seen it yet, media is getting the information before us.”
After all the reports, the SEC released an official statement on its website in which it made 13 charges against the exchange, here are some of them:
- unregistered exchange, brokerage, clearing agency
- unregistered offer and sale of crypto assets
- restricted access to Binance for US investors.com
- deluding investors
SEC Chief Gary Gensler said:
“Through thirteen allegations, we allege that Binance and Zhao engaged in an extensive network of deception, conflict of interest, non-disclosure and willful evasion of law.”