7/2/2023 0 Comments Binance coin price in 2018![]() ![]() Many crypto fans are automatically taking the side of Binance. sanctions following the invasion of Ukraine.Īll these cases and allegations mean the SEC lawsuit cannot be a surprise, particularly amid what is a wider regulatory clampdown in the US on the industry – SEC chair Gary Gensler last month slammed the industry for “mass non-compliance”, summing up the enforcement agency’s views on the space. Department of Justice’s national security division is also conducting an inquiry into whether Binance allowed Russian customers to access the exchange, which would have been in violation of U.S. I wrote a deep dive on what that meant for crypto here, but again, a violation of securities laws was the trigger for the SEC. This was a month after the SEC sued Paxos, the New York-based issuer of the Binance-branded stablecoin, BUSD. The complaint went on to accuse Binance of “(failing) to implement basic compliance procedures designed to prevent and detect terrorist financing and money laundering”. In May, the Commodities Futures Trading Commission charged Binance with the “willful evasion of federal law and operating an illegal digital asset derivatives exchange”. To this day, still claims to have no headquarters, and has been involved in repeated skirmishes with regulators. That same CCO is also quoted elsewhere in the lawsuit as maintaining that “we do not want (Binance).com to be regulated ever”. One quote mentioned in the lawsuit is from (unnamed) Binance chief compliance officer in 2018, who messaged a colleague saying, “we are operating as a fking unlicensed securities exchange in the USA bro.” It seems the SEC agrees. It appears Binance was more aware of this than anyone. Then there is the heart of the issue, a question that has dogged crypto for a while now: what constitutes a security? While there are certainly grey areas within crypto, most notably stablecoins, there is the reality that a massive chunk of the tokens on the market will inevitably be seen as securities in the eyes of the law.Īt the end of the day, that is really all that matters. The SEC also accuses Binance of commingling customer funds and moving them around as they please: “Lacking regulatory oversight, Defendants were free to and did transfer investors’ crypto and fiat assets as Defendants pleased, at times commingling and diverting them in ways that properly registered brokers, dealers, exchanges, and clearing agencies would not have been able to do”. One of these entities is the Zhao-controlled Sigma Chain, accused of engaging in “manipulative trading” to boost volume on Binance. A selection of entities and subsidiaries are named as Binance-affiliated and accused of further transgressions in the suit. The SEC alleges that “Zhao and Binance in reality subverted their own controls to secretly allow high-value US customers to continue trading on the platform”, adding that “Zhao and Binance secretly controlled the Binance.US platform’s operations behind the scenes”. The charges are plenty, but among the most glaring is the SEC allegation that Binance knowingly operated in the US, despite repeated claims from Zhao and Binance that American consumers could not transact on the exchange (instead, a Binance.US subsidiary was launched for US customers in September 2019 after parent company claimed they were leaving the US). The SEC outlined in a complaint filed Monday that the “defendants have enriched themselves by billions of US dollars while placing investors’ assets at significant risk”. In a development that surprises precisely nobody, the SEC is suing Binance and its CEO, Changpeng Zhao.īefore we get into what it all means for crypto, let’s quickly surmise what the lawsuit entails. ![]() Our Head of Research, Dan Ashmore, looks into what it all means for crypto, and who is to blame.Binance and its CEO Changpeng Zhao have fired back, denying any wrongdoing. ![]()
0 Comments
Leave a Reply. |