In one piece of evidence included in the lawsuit, the Binance chief compliance officer messaged a colleague saying: “We are operating as a fking unlicensed securities exchange in the USA bro.” Elsewhere in the lawsuit Binance’s CCO is quoted as saying: “We do not want. The SEC complaint alleges that Zhao directed Binance to conceal the access of high-spending US customers to. It alleged that Zhao was a “control person” for the unregistered exchange operation. The SEC also charged Binance and BAM Trading with operating unregistered securities exchanges, broker-dealers and clearing agencies, as well as the unregistered offering and sale of crypto assets including the Binance USD stablecoin, a digital token whose value is pegged to the American dollar. The regulator claims that Sigma also engaged in “manipulative trading” that artificially inflated trading volume on Binance.US. The SEC alleges that Zhao and Binance were able to commingle or divert customers assets “as they please” including to a Zhao-controlled entity called Sigma Chain.
The SEC alleges that, while Zhao and Binance publicly claimed that Binance.US was created as a separate, independent trading platform for US investors, “Zhao and Binance secretly controlled the Binance.US platform’s operations behind the scenes”.
The SEC said Binance and BAM operated the Binance.US platform, which had been created for US customers after the main Binance platform said in 2019 it was quitting the US market. The 13 civil charges have been placed against Zhao, Binance Holdings and two further Binance-linked entities, BAM Trading Services and BAM Management US Holdings. In its complaint filed on Monday at a federal district court in Washington, the SEC added: “Defendants have enriched themselves by billions of US dollars while placing investors’ assets at significant risk.” The complaint alleges that between June 2018 and July 2021, Binance earned at least $11.6bn (£9.3bn) in revenue, mostly from transaction fees.Īmong other charges, the SEC alleges that, while Zhao and Binance publicly claimed that US customers were restricted from transacting on, “Zhao and Binance in reality subverted their own controls to secretly allow high-value US customers to continue trading on the platform”. “We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk,” said Gurbir Grewal, director of the SEC’s enforcement division.
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