On behalf of the American people, the Securities Exchange Commission (SEC) has filed 13 charges against Binance, the world’s largest cryptocurrency asset trading platform. Also charged was Binance’s founder, Changpeng Zhao, a United Arab Emirates resident. The charges included operating an unregistered exchange, misrepresenting the trading controls that monitor transactions, and the unregistered offer and sale of securities instruments.
The SEC alleges that while Zhao publicly claimed that U.S. customers of Binance were restricted from transacting on the Binance.com website, Zhao secretly allowed high-net-worth U.S. customers to continue trading there.
In addition, the SEC alleges that Binance exercised complete control of customer assets and that control permitted Zhao to co-mingle customer assets or to divert those assets as he pleased. It is alleged that some customer assets were diverted to an entity called Sigma Chain, again, owned and controlled by Zhao.
The SEC further claims that Sigma Chain engaged in manipulative trading and those trades artificially inflated the platform’s trading volume. The complaint also states that the defendants concealed co-mingling billions of dollars of investor assets and were sending them to a third party, Merit Peak Limited, which is further owned by Zhao.