SEC Sues Binance and CEO for Alleged Deception, Sending Bitcoin to Three-Month Low

The world’s biggest cryptocurrency exchange, Binance, and its CEO Changpeng Zhao are facing a legal battle as U.S. regulators have sued them for allegedly operating a “web of deception.” The Securities and Exchange Commission (SEC) filed a complaint in a federal court in Washington, D.C., listing 13 charges against Binance, Zhao, and the operator of its U.S. exchange.

The SEC alleges that Binance artificially inflated its trading volumes, diverted customer funds, failed to restrict U.S. customers from its platform, and misled investors about its market surveillance controls. The complaint also claims that Binance and Zhao secretly controlled customers’ assets, allowing them to commingle and divert investor funds as they pleased.

Binance created separate U.S. entities as part of a scheme to evade U.S. federal securities laws, according to the SEC. The agency also accused Zhao’s trading firm, Sigma Chain, of engaging in wash trading to inflate trading volumes on the Binance.US platform.

In response to the lawsuit, Binance stated that they intend to defend their platform vigorously and emphasized that all user assets on their platforms are safe and secure. They claimed to have cooperated with the SEC from the start and disagreed with the allegations.

The news of the lawsuit sent shockwaves through the cryptocurrency market, with Bitcoin falling as much as 6% to its lowest in almost three months. Binance’s own cryptocurrency, BNB, also dropped more than 5%. Market players believe that the SEC’s allegations could have a significant impact on Binance and the broader crypto industry, as Binance processes trades worth about $65 billion a day.

This legal battle is just the latest in a series of legal challenges for Binance, which is also under investigation by the U.S. Commodity Futures Trading Commission (CFTC) and the Justice Department for suspected money laundering and sanctions violations. The SEC’s lawsuit could potentially cripple Binance, according to analysts.

Overall, the allegations against Binance and its CEO have raised concerns about the integrity of the cryptocurrency market and the regulatory oversight of exchanges. The outcome of this legal battle could have far-reaching implications for the future of the crypto industry.