Feds suing Binance, the world’s largest crypto exchange, claiming it mismanaged “billions of dollars” in client funds and lied to investors
- The lawsuit was filed in federal court in the District of Columbia, and Changpeng Zhao, the founder of Binance, was named as a defendant
- Crypto exchange mismanaged billions of dollars in customer funds, allegations made Monday
Binance, the world’s largest cryptocurrency exchange, has been sued by the Securities and Exchange Commission for allegedly operating an illegal exchange in the United States.
The lawsuit — which is the latest move by regulators to compel crypto firms to comply with US law — was filed in federal court in the District of Columbia on Monday, and Changpeng Zhao was named as a defendant.
Zhao is the founder and majority shareholder of the cryptocurrency.
Wall Street’s SEC regulator has accused Binance of mismanaging customer funds and lying to regulators and investors about its operations.
The complaint also alleges that the defendants concealed the fact that they were mixing billions of dollars of investor assets and sending them to a third party, Merit Peak Limited, which is also owned by Zhao.
Gurbir S. Grewal, Director of the SEC’s Enforcement Division, said, “We allege that Zhao and the Binance Entities not only knew the rules of the road, but also consciously chose to circumvent them. and put their customers and investors at risk”.
The lawsuit was filed in federal court in the District of Columbia and Changpeng Zhao (pictured) was named as a defendant
In response to the news, Zhao said he hadn’t seen the complaint.
He wrote on Twitter: “Our team is ready to ensure the systems are stable, including withdrawals and deposits.” We will issue a response once we see compliance. I have not seen it again. The media get the information before us.
This comes just months after the SEC filed criminal charges against FTX founder Sam Bankman-Fried for orchestrating a scheme to defraud investors.
FTX was a rival of Binance in the crypto trading world until Bankman-Fried’s company filed for bankruptcy last November.
SEC Chairman Gary Gensler said today of Binance’s lawsuit, “Through thirteen counts, we allege that the Zhao and Binance Entities engaged in a vast web of deception, conflicts of interest, lack of disclosure and calculated circumvention of the law”.
“As alleged, Zhao and Binance misled investors about their risk controls and corrupt trading volumes while actively concealing who operated the platform, its affiliate market maker’s manipulative trading, and even where and with whom investor funds and crypto assets were kept.
“They tried to evade US securities laws by announcing bogus controls that they ignored behind the scenes so they could keep high-value US clients on their platforms.”
“The public should beware of investing any of their hard-earned assets with or on these illegal platforms.”