“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,” SEC chair Gary Gensler said in a statement accompanying the charges. It’s no secret that the US Securities and Exchange Commission has been investigating Binance, the world’s largest crypto exchange-which has no head office or formal address but processes $12 billion worth of cryptocurrency transactions per day. But the charge sheet filed today by the SEC in the District of Columbia contains a list of 13 alleged violations of securities laws, some with unavoidable echoes of FTX, the crypto exchange that collapsed in spectacular fashion in November, triggering industrywide turmoil.Īmong other allegations, the SEC claims that Binance and the company’s CEO and founder, Changpeng Zhao, had the freedom to “divert customer assets as they please” to another Zhao-owned business, Sigma Chain-an entity the SEC accuses of engaging in “manipulative trading that artificially inflated the trading volume.” The SEC also alleges that Binance and Zhao concealed the commingling of billions of dollars of customer assets, which were delivered to yet another third party, Merit Peak Limited, also owned by Zhao. In the case of FTX, customer assets are alleged to have been commingled and passed to a sibling company, Alameda Research, to finance trading activity and debt repayment, among other things.
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