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Monday, Mar 18, 2024

SEC Sues Binance, Changpeng Zhao for Securities Law Violations; Alleges Fraud in ICO and Stablecoin Offerings

SEC Sues Binance, Changpeng Zhao for Securities Law Violations; Alleges Fraud in ICO and Stablecoin Offerings

The U.S. Securities and Exchange Commission (SEC) has sued Binance, Binance.US, and Binance CEO Changpeng Zhao for violating federal securities laws.
The SEC alleges that Binance and Zhao offered unregistered securities in the form of the BNB token and Binance-linked BUSD stablecoin, and that Binance's staking service violated securities laws.

The suit also alleges that Binance allowed commingling of customer funds, and that Zhao controlled both Binance.US and a company that inflated Binance.US's trading volume.

The SEC claims that Binance allowed U.S. persons to trade on its platform despite saying it didn't, and that Binance helped high-value U.S. customers circumvent controls to avoid being held accountable.

The SEC also alleges that Binance's Chief Compliance Officer acknowledged that the platform was operating as an unlicensed securities exchange in the U.S. The SEC further alleges that Binance and Zhao transferred investors' assets and commingled and diverted them, and that Zhao personally received $62.5 million from a Binance bank account.

The SEC also claims that Binance allowed Sigma Chain, a company controlled by Zhao, to buy a yacht using funds from a customer account.

Binance and its founder Changpeng Zhao have been sued by the U.S. Securities and Exchange Commission (SEC) for allegedly defrauding investors in the company's initial coin offering (ICO) and engaging in other securities law violations.

The SEC also alleges that Binance and Zhao made false and misleading statements to investors, failed to register the company's ICO as a securities offering, and violated rules regarding the offer and sale of securities.

The suit also names Binance's U.S. subsidiary, Binance US, and its former CEO, Brian Brooks, as defendants.

The SEC's lawsuit comes after the U.S. Commodity Futures Trading Commission (CFTC) brought similar allegations against Binance and Zhao in March 2022.

The SEC's Chair, Gary Gensler, said in a press release that Binance and Zhao engaged in "an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law."
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