The SEC Sues Binance and its CEO for Violating Securities Law

The US Securities and Exchange Commission yesterday filed thirteen charges against Binance and its co-founder, Changpeng Zhao, alleging that they mixed billions of dollars worth of user funds and sent them to a European company under Zhao’s control.

The Commission accused Binance of attempting to bypass regulatory compliance by allowing high-net-worth US customers to continue trading on the unregulated international exchange, and noted that senior executives of the company made comments indicating that they were aware of this as early as 2018.

Additionally, they allege that Binance created Binance.US as a means to insulate themselves from the law enforcement investigations, and its two successive CEOs expressed their concern over Zhao’s parent-level control.

The SEC estimated that Binance earned a total of $11.6 billion in revenue from June 2018 to July 2021, largely from transaction fees.

They also argued that Binance, upon its founding, went to lengths to entice U.S. customers, and this was done under Zhao’s direction and control.