According to a recent report by The New York Times, Binance, one of the world’s largest cryptocurrency exchanges, and its CEO, Changpeng Zhao, are facing charges of violating US securities regulations. The Securities and Exchange Commission (SEC) filed a court document accusing Binance of operating an unregistered securities exchange.
Binance Charged with Mishandling Funds
The SEC also accused Binance of mishandling customer funds, giving regulators and investors false information about its operations, and failing to limit US investors’ access to its unregulated exchange. The charges include secretly transferring billions of dollars in customer funds to a separate company controlled by Binance’s founder, Changpeng Zhao. The regulator also alleged that Binance misled investors about the effectiveness of its systems to identify and prevent manipulative trading.
The SEC filed 13 charges against Binance and Zhao. The agency’s move comes a month after the Commodities Futures Trading Commission also filed its own civil enforcement action against Binance and Zhao. Director of the SEC’s enforcement division, Gurbir S. Grewal, said: “We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk.”
Binance denied the allegations in previous months, stating that it takes its legal obligations seriously and cooperates with regulatory agencies. Changpeng Zhao responded to the recent SEC filing by stating that Binance’s team is working to ensure the stability of its systems, including deposits and withdrawals. He also mentioned that Binance has not yet seen the complaint, and the media had access to the information before the company did.
It is not yet clear how the SEC’s complaint against Binance will affect the exchange’s operations and reputation. However, Zhao’s comments suggest that the company is taking the issue seriously and plans to work with regulators to resolve any concerns.
Featured image from iStock, chart from TradingView.com
