Binance mishandled funds and violated securities laws, according to SEC lawsuit

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The world's largest cryptocurrency exchange Binance and its founder Changpeng Zhao are accused of misusing investor funds, operating as an unregistered exchange and violating a slew of U.S. securities laws in a lawsuit filed by the SEC.

Filed in the U.S. District Court for the District of Columbia, the Securities and Exchange Commission lawsuit on Monday lists thirteen charges against the firm - including commingling and divert customer assets to an entity Zhao owned called Sigma Chain.Binance is a Cayman Islands limited liability company founded by Zhao and the charges are familiar to practices uncovered after the collapse of the second largest cryptocurrency exchange, FTX, last year.

SEC Chair Gary Gensler in a written statement that Zhao and Binance "engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.""The public should beware of investing any of their hard-earned assets with or on these unlawful platforms," Gensler said.

"While we take the SEC's allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. We intend to defend our platform vigorously," the company said in a Twitter post. "Unfortunately, the SEC's refusal to productively engage with us is just another example of the Commission's misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.

 

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