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The lawsuit filed by the SEC stated, “Binance, under Zhao’s control, has acted as an exchange, clearing agency, and broker-dealer in crypto asset securities without registering in those capacities.”
The US Securities and Exchange Commission (SEC) sued Binance and its CEO Changpeng Zhao over the sale of unregistered securities.
In its lawsuit, the SEC claimed that Binance unlawfully sold BNB (BNB) and Binance USD (BUSD) tokens on its platform without registering with the regulatory agency.
According to the SEC, Binance failed to provide appropriate risk disclosures to US clients, making the platform’s yield-generating products illegal. Furthermore, the SEC flagged ten other tokens on Binance, including Algorand (ALGO), Polygon (MATIC), Solana (SOL), and Cardano (ADA), as securities.
The court filing alleged Binance and CZ failed to restrict US clients from accessing the global platform. The SEC said Binance created an evasion strategy to allow its users located in the US to continue using its services. This included privately encouraging US clients to use VPNs to bypass restrictions and allowing VIP clients to open new accounts without any US documents.
Furthermore, the regulatory body accused Binance of diverting “billions” of client funds from Binance’s global and US platforms to Sigma Chain and Merit Peak Limited, two companies owned by CZ.
In response, Binance.US debunked the SEC’s accusations by calling the lawsuit baseless. The firm added,
“Simply put, today’s filing is unjustified by the facts, by the law, or by the Commission’s own precedent. The relief sought by the Commission would harm the very investors the SEC is charged with protecting.”
Similarly, a recent blog post on Binance stressed that user assets on both exchanges remain secure. Citing that the regulatory agency's real intent is to “make headlines'' instead of protecting investors, Binance assured users that it will continue to defend against the SEC's allegations.