SEC says crypto firm Binance mismanaged funds and violated securities laws

WASHINGTON (AP) — The world’s largest cryptocurrency exchange, Binance, and its founder Changpeng Zhao are accused of misusing investors’ funds, operating as an unregistered exchange and violating a multitude of US securities laws in a lawsuit filed by the SEC.

Filed in U.S. District Court for the District of Columbia, the Securities and Exchange Commission lawsuit Monday lists thirteen counts against the company, including mixing and diverting client assets to a Zhao-owned entity called Sigma. Chain.

Binance is a Cayman Islands limited liability company founded by Zhao.

The lawsuit indicates the extent to which the owners of the companies were aware of the alleged violations of the law: “The CCO of Binance bluntly admitted to another Binance compliance officer in December 2018, “we operate as a stock exchange unlicensed securities in the United States.”

SEC Chairman Gary Gensler in a written statement said Zhao and Binance “engaged in a vast web of deceit, conflict of interest, lack of disclosure, and calculated evasion of the law.”

“The public should beware of investing any of their hard-earned assets with or on these illegal platforms,” ​​Gensler said.

This follows other actions by US agencies against the company and its executives.

In March, the Commodity Futures Trading Commission filed a lawsuit against Binance and Zhao in the U.S. District Court for the Northern District of Illinois, charging them with numerous CTFC violations.

The complaint also accuses Samuel Lim, Binance’s former compliance officer, of aiding and abetting Binance’s violations.

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