{"id":19071,"date":"2023-06-05T19:28:17","date_gmt":"2023-06-05T19:28:17","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/nft\/sec-charges-binance-with-13-counts-of-securities-laws-violations\/"},"modified":"2023-06-05T19:28:17","modified_gmt":"2023-06-05T19:28:17","slug":"sec-charges-binance-with-13-counts-of-securities-laws-violations","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/nft\/sec-charges-binance-with-13-counts-of-securities-laws-violations\/","title":{"rendered":"SEC Charges Binance With 13 Counts of Securities Laws Violations"},"content":{"rendered":"
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In a major development, the U.S. Securities and Exchange Commission (SEC) has lodged a comprehensive lawsuit against Binance, the world\u2019s largest cryptocurrency exchange. The lawsuit, which details 13 separate charges, was filed in federal court on Monday, June 5, and accuses Binance of mismanagement of customer funds and deception towards regulators and investors about its operations.<\/p>\n

\u201cThrough thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,\u201d SEC Chair Gary Gensler said. <\/p>\n

\u201cAs alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied.\u201d<\/p>\n

The lawsuit<\/h2>\n

According to the SEC, Binance has been accused of intermingling customer funds amounting to billions of dollars and covertly transferring them to a distinct company, Merit Peak Limited. This company is reportedly under the control of Binance\u2019s founder, Changpeng Zhao<\/a>, who is widely known in the cryptocurrency world as \u201cC.Z.\u201d<\/p>\n

The charges against Binance extend to allegations of misleading investors about the robustness of its systems designed to identify and curb manipulative trading. The SEC further asserts that Binance failed to implement adequate measures to prevent U.S. investors from accessing its unregulated exchange.<\/p>\n

The legal complaint also states that the SEC has identified several individual tokens which it believes to be securities, which include<\/a> BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, ALGO, COTI, SAND (The Sandbox), MANA (Decentraland), AXS (Axie Infinity). <\/p>\n

Binance responds<\/h2>\n

Taking to Twitter to address the allegations, Zhao indicated that he had not yet received the complaint and that the company would respond once it does. Initially, their team said that they were \u201cstanding by, ensuring systems are stable, including withdrawals and deposits.\u201d<\/p>\n

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4.<\/p>\n

Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits. <\/p>\n

We will issue a response once we see the complaint. Haven’t seen it yet. Media gets the info before we do.<\/p>\n

\ud83d\ude4f<\/p>\n

\u2014 CZ \ud83d\udd36 Binance (@cz_binance) June 5, 2023<\/a><\/p><\/blockquote>\n

Zhao eventually tweeted out the company\u2019s official response<\/a> to the allegations, claiming that the SEC aims to \u201cunilaterally define\u201d the shape of the crypto market.<\/p>\n

\u201cWe are disappointed that the U.S. Securities and Exchange Commission chose to file a complaint today against Binance,\u201d the company explained in a blog post addressing the issue.\u00a0\u201cFrom the start, we have actively cooperated with the SEC\u2019s investigations and have worked hard to answer their questions and address their concerns.\u201d<\/p>\n

\u201cUnfortunately, the SEC\u2019s refusal to productively engage with us is just another example of the Commission\u2019s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry,\u201d the post continued. <\/p>\n

\u201cToday\u2019s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology.\u201d <\/p>\n

What this means for Binance<\/h2>\n

This lawsuit against Binance is the latest in a series of actions by U.S. regulators ostensibly aimed at bringing order to a largely unregulated cryptocurrency trading space. While regulators\u2019 seeming objective is to ensure that major players in the industry adhere to U.S. laws, there has been much debate and dissent, even within the SEC\u2019s own leadership, as to whether or not the organization\u2019s \u201cregulation by enforcement\u201d policy is either effective or fair. <\/p>\n

Binance, much like its competitor Coinbase, has been grappling with mounting legal pressure in the face of this approach. The Justice Department is currently investigating the former for potential money-laundering violations. Additionally, Binance\u2019s external auditing firm, Mazars, severed ties with the company following its decision to cease business with cryptocurrency companies last year. Binance\u2019s dominance in the cryptocurrency market has also been waning, though it remains the number one exchange by volume in the market.<\/p>\n

In an attempt to maintain its reputation and avoid complications with the SEC, Binance has brought on board several new compliance officials in the last year, including a former federal prosecutor who is now leading its compliance operation.<\/p>\n

In the SEC statement announcing the charges, Gurbir S. Grewal, director of the SEC\u2019s enforcement division, stated, \u201cWe allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk.\u201d<\/p>\n

The action by the SEC comes just over a month after the Commodities Futures Trading Commission (CFTC) initiated its own civil enforcement action against Binance and Zhao, in which the CFTC is seeking a lifetime ban on Zhao from conducting business within its jurisdiction. It also aims to permanently expel Binance from the United States.<\/p>\n

Editor\u2019s note: This article was written by an nft now staff member in collaboration with OpenAI\u2019s GPT-4.<\/em><\/p>\n<\/p><\/div>\n