In 2023, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission have accused Binance, a leading cryptocurrency exchange platform, of numerous violations and fraudulent schemes. The charges encompass inflating trading volumes, misappropriation of customer funds, and misleading investors about market controls.
The SEC, in a press release, stated that Binance and its founder Changpeng Zhao are confronted with 13 charges. One allegation includes the company's dishonesty about U.S. customers' ability to transact with the firm. According to the SEC, Binance clandestinely permitted high-value U.S. clients to continue trading on their platform.
Moreover, the SEC alleges that Binance operated as an unregistered exchange, broker, and clearing agency. Through transaction fees alone, it garnered $11.6 billion in revenue from U.S. customers. The company consciously continued transactions as an unregistered exchange agency while misleading customers by falsely claiming adequate market surveillance and control over their platforms.
"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. "As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied. They attempted to evade U.S. securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value U.S. customers on their platforms. The public should beware of investing any of their hard-earned assets with or on these unlawful platforms."
Crypto.news reported that Judge Berman Jackson bypassed prepared arguments from both plaintiff and defendant during a court session to ask direct questions instead. Jackson expressed skepticism over major notice arguments presented by the SEC. The session concluded without a definitive resolution on the SEC's jurisdiction over cryptocurrencies. As this legal battle progresses, its outcomes are expected to significantly influence the regulatory landscape of cryptocurrencies.
