it’s no secret The U.S. Securities and Exchange Commission has been investigating Binance, the world’s largest cryptocurrency exchange, which has no headquarters or official address but handles $12 billion worth of cryptocurrency trades a day. But the SEC charge sheet filed today in the District of Columbia contains a list of 13 alleged securities law violations, some of which inevitably echo those of FTX, the cryptocurrency exchange that collapsed in spectacular fashion in November, triggering Turmoil across the industry.
Among other charges, the SEC alleges that Binance and the company’s CEO and founder, Changpeng Zhao, have the authority to “transfer customer assets at will” to another Zhao-owned venture, Sigma Chain — an entity the SEC has accused of engaging in “artificially exaggerated rigged transactions.” [Binance] Trading volume. The SEC also accused Binance and Zhao of concealing the commingling of billions of dollars in client assets that had been delivered to another third party, Merit Peak Limited, also owned by Zhao. In the case of FTX, client assets were allegedly commingled Merger transferred to sister company Alameda Research to finance transactional activities and repay debt, among other things.
“We allege that Zhao and the Binance entity engaged in a broad web of deception, conflict of interest, lack of disclosure, and willful evasion of the law,” SEC Chairman Gary Gensler said in a statement accompanying the charges. “The public should be careful,” Gensler said. , don’t invest any of their hard-earned assets in or on these illegal platforms.”
In an emailed statement, Binance spokesman Simon Matthews said the company was “disappointed” by the SEC’s allegations and blasted the regulator for failing to provide adequate rules for crypto firms operating in the U.S. — — So far, this is a common saying. He also stated that all user assets on all Binance platforms are “safe and secure.”in a tweet Shortly after the SEC complaint, Zhao wrote a “4” — the symbol he used to dismiss the allegations against his company as baseless FUD (short for fear, uncertainty and doubt).
But as dramatic as the allegations seem, industry insiders aren’t shocked. Cory Klippsten, chief executive of rival trading platform Swan Bitcoin, said: “Nobody operating in the space will be surprised by any of the allegations.”
Binance, founded by Zhao in 2017, has expanded rapidly, focusing on low fees, alternative crypto assets and advanced investment products. But its relationship with regulators has long been strained.
Because U.S. law prohibits the sale of cryptocurrency derivatives — more profitable but riskier investment products — Binance operates a separate, more limited service, Binance.US. But the SEC alleges that the exchange deliberately bypassed geo-restrictions to allow U.S. users to trade on its international platform, claiming that the two platforms were effectively operating as one — with no controls in place to protect them independence. Another regulator, the Commodity and Futures Trading Commission, has previously made the same allegations.
The SEC also alleges that Binance misled investors about risk controls purported to prevent manipulative practices such as “wash trading” — a process of selling crypto assets in a round-robin pattern among a small number of accounts, creating demand and exaggerated appearances of need. May drive up prices. The complaint says wash trading is common on Binance.US.