SEC files 13 charges against Binance and its founder Changpeng Zhao
The US Securities and Exchange Commission (SEC) has filed 13 charges against the world’s largest crypto exchange Binance and its founder Changpeng Zhao. The charges allege that the exchange and Zhao worked to remove their own control, so that rich American investors and customers could continue trading on the unregulated international exchange without regulation. The charges also state that Binance sent millions of dollars controlled by Zhao to a European company, where users lost their investments. Binance has prepared Binance.US to protect the main company and Zhao from legal regulations.
The charges against Binance and Zhao include fraud, conflicts of interest, failing to disclose important information, and finding ways to avoid the law. Zhao has said on Twitter that he will respond when he receives a copy of the complaint. Binance expressed disappointment in a blog post about the decision of the US regulator to file a complaint.
Binance.US CEO expressed concern about control
According to the US regulator, the two CEOs of Binance.US, who had been in office for a long time, expressed heavy concern about Zhao’s control. One CEO said in a statement that they were just a name and the company did not operate according to them. When they felt this way, they left the company. However, the names of both CEOs have not been disclosed.
What is the whole matter?
According to the complaint, Binance earned $1.16 billion in revenue from June 2018 to July 2021, most of which came from transaction fees. The SEC alleged that since the company’s inception, it had engaged in “first open and then secretly” luring American customers to its US location, to avoid regulation, under the direction and control of its founder Zhao. According to the SEC, Binance knew that thousands of its customers were in the US, but it chose not to take action, even though US law prohibits the offer and sale of unregistered securities there. The SEC claims that the company’s last compliance effort was a large-scale public show in 2019.
The SEC also alleges that Zhao developed a plan to use VPNs to hide the location of his American customers and obscure the country of origin for compliance documents. The SEC also claims that Binance and Zhao used market-makers, companies that are always ready to trade with customers, to raise money from customers and then mix it with Binance’s money. Two market-makers, Mercurius PTC and Sigma Chain, were controlled by Zhao for two of Binance’s platforms, and they collected money from customers and then merged it with Binance’s money.
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