The US accuses cryptocurrency exchange “Binance” and its founder, Zhao, of a “web of fraud.”
U.S. regulators filed a lawsuit against Binance and its CEO Changpeng Zhao on Monday for supposedly operating a “web of deception,” adding to the threat to the largest cryptocurrency exchange in the world and driving bitcoin to its lowest point in nearly three months.
Against Binance, Zhao, and the owner of its ostensibly independent U.S. exchange, the “Securities and Exchange Commission (SEC)” filed a complaint in “federal court” in Washington with 13 allegations.
The SEC said that Binance manipulated its trading volumes, misappropriated client funds, failed to bar U.S. users from using its platform, and deceived investors about its financial surveillance capabilities.
The SEC also claimed that Binance set up distinct U.S. organisations “as part of a complex plan to avoid U.S. federal security laws,” citing a number of actions that were initially exposed by Reuters in a series of inquiries into the exchange that were released this year and in 2022.
The revelation caused the price of Bitcoin, the most popular cryptocurrency in the world, to drop as much as 6% to its lowest level in nearly three months. The price of BNB, the fourth-largest cryptocurrency in the entire globe by market cap, fell by more than 5%.
According to market participants, the SEC’s accusations could hinder Binance, and the action is likely to have an impact on the entire crypto sector. By executing trades worth around $65 billion per day in 2018, Binance dominated the cryptocurrency market.
The SEC complaint is the most recent in a string of legal woes for Binance, which was additionally accused by the “U.S. Commodity Futures Trading Commission” in March of running an “illegal” exchange and a “sham” compliance programme, according to the regulator. These, according to Zhao, were an “incomplete presentation of events.”
People with knowledge of the inquiry claim that the Justice Department is also looking into Binance for possible laundering funds and penalties violations.
According to the SEC, Zhao’s company, which was under his control, transferred billions of dollars in client assets from Binance to a trading company that he also controlled, Merit Peak, in violation of U.S. law by commingling, or mixing, those funds with business funds.
The executive, according to the SEC, had “signatory jurisdiction over BAM Trading’s U.S. dollar accounts” and had tenure that would have ended preferably in December 2020.
About The Author
