Mathieu
**BINANCE ACCUSED OF ILLEGAL ACTIVITY IN THE US**
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, accusing the world’s largest crypto exchange of operating unlawfully in the United States. The exchange’s founder, Changpeng Zhao, has also been named in the suit.
According to the lawsuit, Binance and Zhao allegedly solicited investors illegally and engaged in multiple unregistered investment schemes. It further claims that they deceived both retail and institutional investors about surveillance and controls over manipulative trading on the Binance.US Platform, which were virtually non-existent.
In response to the lawsuit, Binance expressed its disappointment with the SEC’s decision to file a complaint. The exchange stated that it has cooperated with the SEC’s investigations from the beginning, answering their questions and addressing their concerns.
While Binance’s response did not directly address most of the SEC’s allegations, the exchange argued that the agency has chosen a blunt approach of enforcement and litigation instead of a thoughtful and nuanced approach that the dynamic and complex technology demands.
The SEC alleges that Binance acted as a broker-dealer, exchange, and clearing agency without proper registration. It specifically identifies the BUSD token issued by Paxos and Binance’s BNB token as securities that should have been registered with the agency. The SEC claims that the ultimate goal was to avoid regulatory oversight.
Despite Binance’s claim that Binance.US operated separately from the main exchange and did not serve US customers, the SEC alleges that valuable investors were directed to bypass the controls meant to restrict their access to the platform.
Furthermore, the SEC claims that Binance falsely represented to investors that it had implemented controls against market manipulation. However, the exchange allegedly failed to meet the basic requirements of registered exchanges in preventing fraudulent and manipulative acts. Specifically, there were no monitors in place to detect “wash trading,” a manipulative practice where a trader buys an asset from their own account to artificially inflate its price.
**Sources:**
– US Securities and Exchange Commission: [Link](https://www.documentcloud.org/documents/23834561-sce-vs-binance-complaint?responsive=1&title=1)
– Binance’s response: [Link](https://www.binance.com/en/blog/ecosystem/sec-complaint-aims-to-unilaterally-define-crypto-market-structure-8707489117122437402)
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