SEC sues crypto giant Binance and its CEO
Why it matters: This is the culmination of a long-running investigation into Binance by U.S. regulators.
Driving the news: Binance, Binance.US and Zhao "defrauded equity, retail, and institutional investors about purported surveillance and controls over manipulative trading on the Binance.US Platform, which were in fact virtually non-existent," the lawsuit alleges.
- The case further claims that Binance sold unregistered crypto asset securities and that its own tokens, the BNB and BUSD, as well as its staking investment schemes — are in fact securities.
- It adds that Binance purposely sought to evade U.S. laws by separating Binance.US from Binance in 2018, but that Zhao and Binance still remained heavily involved behind the scenes.
- The then-CEO of BAM Trading (which operates Binance.US), allegedly told Binance's CFO in 2020 that "'her “entire team feels like [it had] been duped into being a puppet.'"
Of note: The lawsuit also alleges that Sigma Chain, a trading firm controlled and owned by Zhao, engaged in "wash trading" to inflate trading volumes on Binance.US.
- Binance said in a blog post that it intends "to defend our platform vigorously."
The big picture: Other U.S. regulators, including the Justice Department and the CFTC, have been investigating Binance, which has been seeking to settle.
Read the complaint: