The Securities and Exchange Commission (SEC) filed 13 charges Monday against the world’s largest cryptocurrency exchange, Binance, and its co-founder Changpeng Zhao for allegedly running an illegal operation, according to court documents.
Binance allegedly operated an illegal cryptocurrency exchange, and Zhao allegedly commingled billions of dollars of customer funds and distributed them to another entity he controlled, according to the SEC court filing. The defendants showed a “blatant disregard of the federal securities laws and the investor and market protections these laws provide,” the SEC stated.
“In so doing, Defendants have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk,” the filing continues.
Zhao and Binance allegedly moved investors’ crypto and fiat assets, including billions of U.S. dollars of customer funds to Merit Peak Limited, a company controlled by Zhao incorporated in the British Virgin Islands, according to the filing.
“We are operating as a fking unlicensed securities exchange in the USA bro,” Binance’s then-chief compliance officer Samuel Lim acknowledged to another compliance official in December 2018, according to the SEC filing.
The SEC suit follows a Commodity Futures Trading Commission (CFTC) lawsuit in March that Binance and Zhao did not follow regulations, according to a CFTC filing. (RELATED: Executives At Signature Bank Dumped $100 Million In Stock During Crypto Uptick)
ATLANTA, GEORGIA – NOVEMBER 09: In this photo illustration, the Binance website is seen on a computer on November 09, 2022 in Atlanta, Georgia. Binance, the world’s largest cryptocurrency firm, agreed to acquire FTX, another large cryptocurrency exchange, in a rushed sale in order to prevent a liquidity crisis, which is known as the “Lehman Moment” in the crypto industry. (Photo Illustration by Michael M. Santiago/Getty Images)
Meanwhile, the company allegedly hid its efforts to help certain high-value U.S. customers keep trading on the platform, according to the filing. “[O]n the surface we cannot be seen to have US users[,] but in reality, we should get them through other creative means,” Lim stated.
Zhao allegedly said his “goal” was “to reduce the losses to ourselves, and at the same time to make the U.S. regulatory authorities not trouble us,” according to the filing.
“We believe the lawsuit is baseless and we intend to defend ourselves vigorously,” Binance.US said in a statement on Twitter, adding, “today’s filing is unjustified by the facts, by the law, or by the Commission’s own precedent. The relief sought by the Commission would harm the very investors the SEC is charged with protecting.”
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.