Binance Faces SEC Lawsuit for Fraud and Mishandling Investor’s Funds
Binance, the world’s largest cryptocurrency exchange, has been accused of involving itself in a series of frauds. The US financial regulators filed another lawsuit against Binance to hit it with another regulatory difficulty in the market.
The Securities and Exchange Commission (SEC) accused Binance and its CEO, Changpeng Zhao, known as CZ, of ignoring the rules that are crucial to protecting investors to keep operating in the US. Both the company and CEO have been accused of mishandling the investors funds as well.
This is the second complaint filed against the world’s crypto giant by the SEC this year. The latest lawsuit is supposed to urge the US government to work aggressively on crypto regulation in the country.
In a response, Binance said it would defend the company very strenuously.
Binance was founded in 2017, and now it is operating in more than 100 countries around the world to become the largest crypto exchange in the world. Responding to the SEC allegation, Binance denied that customers funds were at risk.
Binance said it had been in discussions with the regulator, stating, “While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis.”
Binance claimed, the legal action is an example of regulators not giving clear rules and guidance to the digital asset industry, which is causing problems.
Dozen of Charges
The SEC brings 13 charges against the company and Mr. Zhao for illegally attracting investors and customers, providing false information about trading on the platform, and deceiving the public about its supervision.
The SEC accused the company and its owner of diverting customer funds to companies controlled by a Chinese-Canadian billionaire, Mr. Zhao, in the crypto industry, popularly known as CZ.
Announcing the 136-page lawsuit, SEC Chair Gary Gensler said, “Mr Zhao and Binance engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”
“The public should beware of investing any of their hard-earned assets with or on these unlawful platforms,” he further added.
American authorities are determined to regulate the crypto industry as soon as possible to secure the funds of American customers. especially after the collapse of Binance’s rival, FTX, they pledge to use existing laws to root out fraud in this sector.
Another US financial regulator, the Commodity Futures Trading Commission, filed its own lawsuit against Binance in March, accusing it of operating in the country illegally, which is under investigation by the Department of Justice.
As of press time, the latest lawsuit by the SEC, which seeks to ban Binance in the country, had sent the Bitcoin price to $25,642, dropping more than 5%.
Binance in The Eyes of Regulation
The largest crypto exchange in the world, Binance, is facing legal tribulations in various countries. In March, the U.S. Commodities Futures Trading Commission (CFTC) took legal action against Binance and its founder, Changpeng Zhao. The CFTC accused them of running an exchange that was considered “illegal” according to the regulator.
In the same way, Binance announced its departure from Canada due to the strict regulations for crypto customers in the country. Recently, one of the big four banks in Australia, Westpac Banking Corp. (WBC.AX), banned customers from transacting with Binance.
