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The US Securities & Exchange Commission, also known as SEC, has announced that they have filed Section 13 charges against Binance, BAM Trading Services, and Changpeng Zhao for violating several security laws. A brief summary mentioned by the SEC states that the charges are related to misrepresenting customers about the control over trading, operating unregistered exchanges, and listing unregulated products.
At the core of it, the issue pertains to the fact that Binance.US has been operating with products that are not regulated by the SEC. Binance, along with its founder, had earlier claimed that US residents were restricted from accessing the platform. However, it was later found that the platform was not following its own public statement. Meaning, Binance was allowing some of the high-value US customers to engage with trade.
Additionally, Binance.US was assumed to be a separate entity specifically for US traders. The SEC’s investigation revealed that the venture was secretly being controlled by Binance and Zhao despite all of it.
Customers’ safety has been of utmost importance to the SEC. Therefore, this formed the third crucial point in its report wherein the SEC has alleged that Binance exercises control over its assets by diverting them as per their preference. It has also come to light that Binance takes these funds and settles them in Sigma Chain, a venture owned and controlled by Zhao.
Mentions about Sigma Chain in the SEC’s report go beyond that. It has been highlighted that Sigma Chain indulges in manipulative trading to artificially inflate the trading volume of the platform. A crucial detail about sending millions of dollars of funds to Merit Peak Limited, a third-party platform owned by Zhao, has come to light.
A concrete statement by Binance is awaited with no surprise that it will go to all possible defensive extents. Zhao has not spoken a word as well. However, the community has taken that to their hands to call this a personal vendetta, adding that it only makes them sound unprofessional. Some members of the Binance community have also gone on to call the SEC a joke.
The US federal government’s independent agency is a joke, but Binance is something serious. This is precisely the statement that the community is making on the internet. Investigations are ongoing, and such statements should not be taken seriously, at least till a report has been published and authorities & regulators have. Binance crypto exchange platform has some serious allegations on it, most of them dealing with the security of customers’ funds. Taking any side could come with serious consequences.
Gary Gensler, the SEC Chair, has stated that they have alleged Binance of engaging in the web of deception through a total of thirteen charges, adding that there is a conflict of interest, lack of disclosure, and tax evasion with calculations at their fingertips.
A similar tone has been echoed by Gurbir S. Grewal, the Director of the Division of Enforcement at the SEC. They have said that Zhao and Binance knowingly chose to evade the regulatory laws.