US accuses world’s largest cryptocurrency exchange Binance of mishandling funds

The United States Securities and Exchange Commission has sued Binance, the world’s largest cryptocurrency exchange, accusing the company of mishandling customer funds.

Binance and its CEO Changpeng Zhao, commonly known by his initials ‘CZ,’ face 13 federal charges that include misleading investors, manipulating customer assets, and failing to register with the proper regulatory bodies.

The SEC accused the crypto giant of creating ‘an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,’ SEC Chairman Gary Gensler said.

Regulators said that Zhao and Binance ‘commingle customer assets or divert customer assets as they please, including to an entity Zhao owned and controlled called Sigma Chain.’

Sigma Chain then used that money for ‘manipulative trading’ used to artificially inflate Binance’s trading volume.

Additionally, the company faces charges of deliberately chosing to ‘evade’ US law.

In 2019, Commodity Futures Trading Commission (CFTC) banned Binance from operating in the US, due to the fact that the company failed to properly register with the agency.

In order to comply with US law, the company set up a separate, independent exchange called Binance.US.

However, the SEC has now accused the Zhao of secretly manipulating and controlling Binance.US despite its purported independence.

They also say Binance allowed certain ‘high-value US customers’ continued access to the original Binance exchange despite being banned from operating in the country.

The complaint alleges that Zhao personally directed these moves to break US law. ‘In one instance, the Binance chief compliance officer messaged a colleague that, “[w]e are operating as a fking unlicensed securities exchange in the USA bro,”’ the SEC said.

‘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 – all in an effort to maximize their own profits,’ SEC Division of Enforcement Director Gurbir S Grewal said.

The lawsuit comes months after Binance’s former top competitor FTX collapsed in part due to similar allegations of mishandling customer funds.

The company is now in bankruptcy, and its disgraced CEO Sam Bankman-Fried is now facing criminal charges for securities fraud and wire fraud.

This is a breaking story, check back for updates…