SEC sues Binance and its founder for alleged fraud – 05/06/2023 – Market

Binance and its chief executive, Changpeng Zhao, operated a “net of fraud” that included artificially inflating their trading volumes and embezzling client assets, alleged the SEC (Securities and Exchange Commission, equivalent to the CVM), the body that regulates the US capital market.

The agency filed a lawsuit against Binance and Zhao on Monday for failing to restrict US customers of its platform and misleading investors about its market surveillance controls, as well as operating an unregistered exchange.

The SEC’s lawsuit was filed in federal court and also alleged that the company and Zhao secretly control clients’ assets, allowing them to intermingle and embezzle client funds.

It said the platform had created separate U.S. entities “as part of an elaborate scheme to circumvent U.S. federal securities laws.”

According to the SEC, at least between September 2019 and June 2022, Sigma Chain, a trading company owned and controlled by Zhao, engaged in laundering trades that artificially inflated the trading volume of cryptocurrency securities on the Binance platform. .US.

“We allege that Zhao and Binance engaged in an extensive web of fraud, conflicts of interest, lack of disclosure and calculated evasion of the law,” SEC Chairman Gary Gensler said in a statement.

Sought, Binance did not comment on the accusations. In a tweet, Zhao said that Binance will issue a response once it reviews the SEC filing and said that the platform’s team is “standing by, ensuring systems are stable, including withdrawals and deposits.”

Binance’s BNB cryptocurrency, the world’s fourth largest by market size, dropped more than 5% on the news.

Binance is also under investigation by the Justice Department for suspected money laundering and sanctions violations, according to people familiar with the investigation.

Binance’s global trading platform Binance.com dominates the cryptocurrency trading scene, last year processing trades worth $65 billion (R$319.9 billion) per day with up to 70% of the market.