Binance and CEO Accused by SEC of Offering Unregistered Securities Trading to U.S. Customers

In a major legal development, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, the world’s largest cryptocurrency exchange, and its founder Changpeng Zhao. The SEC alleges that Binance violated federal securities laws by offering unregistered securities trading to U.S. customers, commingling investor funds, and providing false information to regulators and investors.

The lawsuit claims that Binance operated an illegal online platform that allowed U.S. customers to trade digital assets considered securities under federal laws. Notably, the SEC identified Binance’s BNB token and Paxos’ BUSD stablecoin, along with other prominent cryptocurrencies, as securities. Binance and Zhao are accused of failing to register their platform with the SEC and disregarding regulatory requirements.

The SEC also accuses Binance and Zhao of commingling billions of dollars in customer funds with their own, without disclosing this to investors or regulators. This alleged action created a risk of loss or misuse of customer funds while evading oversight. Additionally, the SEC claims that Binance and Zhao provided false information about their compliance with securities laws and control over the Binance.US platform.

The lawsuit seeks injunctive relief, disgorgement plus interest, and civil penalties against Binance and Zhao. It serves as a warning to investors to exercise caution when dealing with unregistered online platforms offering securities trading.

In response, Binance has issued a formal statement denying the allegations and highlighting their cooperation with the SEC’s investigation. They plan to vigorously defend their platform and cooperate with regulators while protecting users’ interests. The lawsuit’s outcome and the inclusion of other prominent cryptocurrencies as securities have far-reaching implications for the crypto industry, potentially leading to increased regulatory scrutiny and reduced investor confidence.

This legal battle will be closely monitored as it has the potential to shape the future regulatory landscape and business practices within the cryptocurrency industry. It highlights the importance of compliance with securities laws and the need for transparent and accountable operations in the evolving crypto space.