The Securities and Exchange Commission (SEC) has filed 13 charges against cryptocurrency exchange Binance, two affiliated entities and Founder/CEO Changpeng Zhao. The US securities watchdog accused Binance and Zhao of operating illegal trading platforms, offering unregistered crypto asset securities and commingling customers’ funds.

It also alleged that Binance operated as an exchange, broker-dealer and clearing agency without authorization. US derivatives watchdog, the Commodity Futures Trading Commission (CFTC) , made similar allegationsagainst Binance and Zhao two months ago.

SEC Hits Binance with Multiple Allegations

In a complaint filed before a district court in Columbia, SEC alleged that Binance Holdings operated unregistered crypto exchanges Binance.com and Binance.US, its US arm. The regulator further accused Binance of tweaking its controls to enable high-value US customers to trade on Binance.com contrary to the exchange’s public claim that US clients were barred from the platform.

In addition, SEC alleged that affiliated entities BAM Trading and BAM Management together with Binance offered and sold the crypto exchange’s unregistered token and stablecoin, BNB and BUSD, respectively, on the Binance.US platform. On top of that, they allegedly provided unregistered profit-generating programmes ‘BNV Vault’ and ‘Simple Earn’ as well as crypto staking products, to US investors.

Moreover, the SEC accused Zhao and Binance of secretly controlling the US arm despite claiming publicly that it is “a separate, independent trading platform for US investors,” according to a statement.

Giving more details, SEC said Zhao and Binance’s access to the US trading arm gave them access to commingling customer assets or diverting them to Sigma Chain, an entity owned and controlled by Zhao. The securities watchdog further alleged that Zhao and Binance merged ‘billions of dollars of investor assets’ and sent them to Merit Peak Limited, another entity owned by the Binance Founder.

“Through thirteen charges, 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,” said SEC Chair Gary Gensler.

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