SEC sues Binance for securities violations
By ForGeeks The U.S. Securities and Exchange Commission filed 13 charges against Binance,
the world’s largest cryptocurrency exchange, and its founder, Changpeng Zhao, alleging that they pooled billions of dollars in user funds and sent them to a European company controlled by Zhao.
On Monday, U.S. regulators said Zhao and his exchange worked to undermine «s own controls» to allow American investors and high-net-worth customers to continue trading on the unregulated international exchange Binance. One executive allegedly told a compliance officer that the company operated as «an unlicensed securities exchange in the United States».
The complaint alleges that Binance created Binance.US as a shield for the main company and Zhao to «reveal, slow down and solve»law enforcement goals and isolate Binance.
Two Binance.US executives expressed deep concern about Zhao’s level of control, according to the SEC. Both testified to federal regulators: Neither was named, but the company’s first and second executives were Catherine Kohli and Brian Brooks.
The
«I’m not actually running this company, and the mission that I believe I signed on to is not. And as soon as I realized that, I left» —the former CEO of Binance.US, identified as «BAM CEO B»;
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Binance earned $11.6 billion in revenue, much of it in transaction fees, from June 2018 through July 2021, the complaint says. Since its inception, the exchange «first overtly and then covertly»has worked to attract U.S. customers at the direction and under the control of its founder, Zhao, the SEC alleges.
Binance knew that tens of thousands of customers were in the U.S., but chose to do nothing, the SEC claims, despite a federal law prohibiting the unregistered offering and sale of securities. Binance’s final compliance in 2019 was largely a public show, the SEC complaint goes on to say.
SEC alleges that Zhao ordered the creation of an evasion plan for wealthy customers, using a VPN service to hide their U.S. location and filing compliance documents to conceal their country of origin.
