![]() The SEC alleges that Binance actively sought U.S. The complaint says that customer funds were not segregated into individual accounts and when customers want to withdraw funds, “Binance transfers the requested amount of crypto assets from its omnibus wallet.”įurthermore, the lack of proper regulation of Binance enabled Sigma Chain AG, a trading firm owned by CZ, to engage in wash-trading, or the practice of buying and selling the same cryptocurrencies in order to create the impression of high trading volume. The complaint says that CZ was “free to and did transfer investors’ crypto and fiat assets as pleased, at times commingling them and diverting them in ways that properly registered brokers, dealer and exchanges” are barred from doing.ĬZ allegedly commingled billions in customer funds with those of Merit Peak Limited, a trading company he used to trade directly with customers through a program called “Binance OTC.” In addition, Binance says that “any allegations that user assets on the Binance.US platform have ever been at risk are simply wrong” and that “all user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary.” Accusations of self-dealingĪs an unregistered exchange, the SEC has limited ability to oversee Binance’s operations, and the agency alleges that this enabled CZ to do what he wished with customer assets that were stored on the platform. “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,” he added.īinance responded to the enforcement action in a blog post in which it chided the regulator for bringing the complaint after Binance “engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations.” ![]() “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,” SEC Chairman Gary Gensler said in a Monday statement. ![]() The complaint also alleges that Zhao, known in the crypto world as “CZ”, exercised control over customer assets and commingled them with personal and company holdings.
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