The defendants showed a "blatant disregard" for federal law, the SEC alleged. Securities and Exchange Commission chose to file a complaint today against Binance seeking, among other remedies, purported emergency relief." The company added that it has "actively cooperated with the SEC's investigations" and "engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations." In a blog post that followed, Binance wrote, "We are disappointed that the U.S. "We will issue a response once we see the complaint," Zhao said on Twitter. The complaint comes after the Commodity Futures Trading Commission filed similar charges against the crypto exchange, alleging that it failed to prevent U.S. Zhao dismissed the charges on Twitter by writing "4," a popular refrain in Binance's community urging users to ignore fear, uncertainty and doubt, or "FUD." The "proprietary trading firm" then spent $11 million to purchase a "yacht," the complaint said. Sigma Chain collected $190 million for its beneficial owner Zhao, the SEC alleged. Most damaging to investors, they allegedly engaged in "wash trading," trading with themselves to artificially prop up the price of crypto assets. The firms also allegedly mixed customer funds with Binance's money, similar to allegations against bankrupt crypto exchange FTX. But the SEC complaint highlighted multiple issues with the two companies' roles: They were both beneficially owned by Zhao and collected "tens of billions of dollars" of customer money. Merit Peak and Sigma Chain allegedly acted as "market makers" for Binance's two platforms, meaning they were always available to fill a customer order to buy or sell a crypto asset. The SEC also alleged that Binance and Zhao used market-making companies that they controlled to inflate trading prices and profit off of their customers. We cannot be held accountable for it," Zhao allegedly told his top team in 2019. But the message, the message needs to be finessed very carefully because whatever we send will be public. "We do need to let users know that they can change their KYC on and continue to use it. location and submitting compliance documents to obscure their country of origin.ĬNBC previously reported on how Binance employees encouraged users to evade the exchange's "know your customer" systems through VPNs. The SEC alleges Zhao ordered the creation of an evasion plan for high-net-worth customers, using a VPN service to hide their U.S. Binance's ultimate compliance, in 2019, was largely a public show, the SEC complaint continues. but chose not to act, the SEC alleged, despite federal law barring the unregistered offer and sale of securities. customers, at the direction and control of its founder Zhao, the SEC alleged.īinance knew that tens of thousands of customers were in the U.S. Since its inception, the exchange has "at first overtly and later furtively" worked to entice U.S. And as soon as I realized that, I left," a former Binance.US CEO identified as "BAM CEO B" testified to the SEC.īetween June 2018 and July 2021, Binance earned $11.6 billion in revenue, most of which came from transaction fees, the complaint said. "I'm not actually the one running this company, and the mission that I believe I signed up for isn't the mission. Both testified before federal regulators: Neither were named, but its first and second chief executives were Catherine Coley and Brian Brooks. Two successive Binance.US CEOs expressed deep concern over Zhao's level of control, according to the SEC. The complaint alleges that Binance created Binance.US as a shield for the main company and Zhao, to "reveal, retard, and resolve" law enforcement targets and insulate Binance. One senior executive allegedly told a compliance officer that the company was operating as a " unlicensed securities exchange in the USA bro." Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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