On Monday, US regulators filed a lawsuit against Binance and its CEO Changpeng Zhao, claiming that they operated a deceptive system. This has added more pressure on the largest cryptocurrency exchange in the world and resulted in bitcoin hitting a low point not seen in almost three months.
The Securities and Exchange Commission (SEC) filed a complaint in a federal court in Washington, D.C. The complaint listed 13 charges against Binance, Zhao, and the operator of its US exchange, reported Reuters.
The SEC accused Binance of inflating trading volumes and mishandling customer funds, as well as failing to enforce restrictions for US customers and providing inaccurate information to investors about its market monitoring procedures.
The SEC alleged that Binance and its founder Zhao had undisclosed control over customers’ assets, enabling them to mix and redirect investor funds at their discretion.
The SEC has accused Binance of creating separate US entities in order to avoid federal securities laws, citing several practices previously reported by Reuters in investigations from both this year and 2022.
According to the SEC, Sigma Chain, a trading firm owned and controlled by Zhao, engaged in wash trading from almost three years ago until June 2022. This activity allegedly artificially inflated the trading volume of crypto asset securities on the Binance.US platform.
“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,” said SEC Chair Gary Gensler said in a statement.