Yesterday evening, the SEC charged Binance and BinanceUS with 13 different offenses. In this article, we will discuss seven of the charges brought by the SEC.
7 significant allegations made by the SEC charged Binance and BinanceUS
The top cryptocurrency exchange Binance and linked parties were charged with serious securities law violations by the U.S. Securities and Exchange Commission (SEC) on June 5.
The complaint is one of the SEC’s most thorough filings of allegations against a cryptocurrency corporation to date. The most significant claims and information are included as follows.
1. BNB and BUSD are both Securities
The Binance cryptocurrencies, comprising the BNB exchange token (BNB) and the Binance USD stablecoin (BUSD), have been classified as securities by the SEC. The regulator declared that Binance’s BNB Vault, Simple Earn program and staking services are also securities. The company’s sales and services, according to the report, were all carried out without registration and illegally.
2. The Majority of Third-Party Tokens are Securities
Numerous currencies listed by Binance, including Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and Coti (COTI), have been deemed securities by the SEC. The SEC voiced worry over Binance’s failure to place any trading limits on its platform, despite the fact that Binance did not issue the tokens mentioned.
3. SEC Demands Zhao and Others are Enjoined
The Securities and Exchange Commission (SEC) declared that Changpeng Zhao, Binance, Binance.US parent BAM firm Trading, and related parties should be permanently restrained from violating the relevant Securities Act and Exchange Act provisions. It added that they should also be ordered to pay disgorgement and civil fines.
4. Binance Disregarded American Regulations
After its 2017 introduction, despite ostensibly barring US access in 2019, the SEC claimed that Binance covertly promoted its services to American consumers.
One expert advised Binance to establish a “Tai Chi” organization in the US with the sole purpose of communicating with the SEC and posting reports in order to “pause potential enforcement efforts.” Additionally, while privately instructing some of those users on how to get around restrictions, the consultant urged Binance to ban US users from using its primary exchange.
5. The Situation was Known to the Executives
The CCO of Binance, who was left unidentified by the SEC, made comments that suggested he was aware of wrongdoing. The CCO stated in 2018:
“We are operating as a fking unlicensed securities exchange in the USA, bro.”
He stated that Binance did not desire Binance.com to be regulated at any time in 2020 and claimed that this prompted the establishment of regional entities.
6. Controlled U.S. Funds by CZ-owned Businesses
According to the SEC, Binance CEO Changpeng Zhao and other entities he owned held 100% of a number of businesses connected to Binance.
Zhao had a lot of control over the bank accounts and user crypto deposits of U.S. businesses under BAM, despite the fact that Zhao did not have full ownership of those businesses. The SEC also claimed that Zhao’s Merit Peak and Sigma Chain “were used in the transfer of tens of billions of U.S. dollars” between Binance and its American competitors.
According to the regulator, Zhao and Binance were also involved in the development, introduction, hiring, trading, and business operations of American companies.
7. Wash Trading Became Rife
The SEC concluded by finding that Binance’s U.S. businesses misled users by exaggerating the effectiveness of wash trading controls and trade volume accuracy.
The SEC claimed that because Sigma Chain served as a market maker, significant wash trading occurred. Sigma Chain accounts wash-traded 48 of the 51 newly listed assets at one point and 51 of the 58 listed assets at another point.
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