Securities watchdog alleges the company and CEO Changpeng Zhao diverted customer funds and sought to escape regulatory oversight.
The U.S. Securities and Exchange Commission on Monday sued Binance and its CEO, Changpeng Zhao, alleging the cryptocurrency company was effectively operating an illegal exchange and diverted investors' funds into a trading entity controlled by Zhao.
The lawsuit, filed Monday in federal court in Washington, D.C., claims Binance ran its trading operations without registering with the SEC, as required by law, in order to"evade the critical regulatory oversight" aimed at protecting investors and markets. Binance, the world's largest crypto-currency exchange, allegedly commingled and diverted customers' assets, steps that registered financial firms wouldn't be able to do, the agency claims. The SEC also charges that Zhao and Binance redirected"billions of U.S. dollars of customer funds" into an account controlled by Zhao.
"Defendants' purposeful efforts to evade U.S. regulatory oversight while simultaneously providing securities-related services to U.S. customers put the safety of billions of dollars of U.S. investor capital at risk and at Binance's and Zhao's mercy," the lawsuit claims. The lawsuit also alleges Binance defrauded customers by claiming they had controls in place to monitor"manipulative trading."This is a developing story and will be updated.
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