While Binance and CZ are already the subject of a complaint filed by the CFTC, the notorious US regulator, the SEC, is now also taking on the crypto exchange and its founder.
The U.S. Securities and Exchange Commission filed 13 charges against Binance and its founder-CEO, Changpeng Zhao, it was reported on Monday.
As a reminder, back in March, the Commodity Futures Trading Commission (CFTC) also launched charges against the cryptocurrency exchange platform and its CEO for violating derivatives rules.
It seems that the SEC is conducting investigations centered on two foreign companies that act as market makers on the Binance platform, providing liquidity for trades. These companies, Merit Peak Ltd and Sigma Chain, are controlled by Binance founder Changpeng Zhao.
According to the SEC’s allegations, Binance secretly transferred colossal sums, amounting to billions of dollars, from its customers’ funds to Merit Peak Ltd. In addition, funds would be sent by Changpeng Zhao and Binance executives to Sigma Chain on a discretionary basis. All this would take place in total opacity, where funds would be mixed without transparency.
Binance BNB and BUSD are securities!
Binance is also being sued for failing to take the necessary steps to allow American investors access to its platform. The company is also accused of violating securities laws with its staking service. The SEC asserts that BNB and BUSD are securities in its complaint filed in the U.S. District Court for the District of Columbia.
We allege that Zhao and the Binance entities not only knew the rules, but consciously chose to circumvent them and put their customers and investors at risk,” said Gurbir S. Grewal, director of the SEC’s enforcement division.
In response, CZ tweeted “4”, meaning “Ignore FUD, fake news, attacks, etc”.
“Our team is by your side to ensure systems are stable, including withdrawals and deposits. We will issue a response once we see the complaint. I haven’t seen it yet. The media get the information before we do,” he said.
In a press release issued hastily on Monday evening, Binance went into more detail about the complaint.
We intend to vigorously defend our platform. Unfortunately, the SEC’s refusal to engage productively 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,” the crypto exchange wrote.
Binance went on to claim that allegations that its users’ assets have been threatened are “simply untrue“.
“All user assets on Binance and Binance’s affiliated platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary.”
“It appears, based on these developments, that the SEC’s goal here was never to protect investors; if that were truly the case, the staff would have thoughtfully engaged with us on the facts and in our efforts to demonstrate the safety and security of the Binance.US platform. Instead, the SEC’s true intention seems to be to make headlines […]
Because Binance is not a U.S. exchange, the SEC’s actions are limited in scope. Still, we stand with digital asset market participants in the U.S. against the SEC’s latest overreach, and we’re ready to fight it,” the platform added.