The FBI is suing Binance, the world’s largest crypto exchange, for mishandling “billions of dollars” in customer funds and lying to investors
- The lawsuit was filed in federal court in the District of Columbia, and Changpeng Zhao, the founder of Binance, was named as a defended
- According to Monday’s allegations, the crypto exchange mishandled billions of dollars in client funds
Binance, the world’s largest cryptocurrency exchange, has been sued by the Securities and Exchange Commission for allegedly operating an illegal exchange in the US.
The lawsuit — the latest action taken by regulators to get crypto companies to comply with US law — was filed Monday in federal court in the District of Columbia, and Changpeng Zhao was named as a defender.
Zhao is the founder and controlling shareholder of the cryptocurrency.
Wall Street regulator SEC has accused Binance of mishandling client funds and lying to regulators and investors about its activities.
The complaint also alleges that the defendants hid the fact that it mixed billions of dollars in investor assets and sent them to a third party, Merit Peak Limited, which is also owned by Zhao.
Gurbir S. Grewal, Director of the SEC’s Enforcement Division, said: “We allege that Zhao and the Binance entities not only knew the rules of the road, but also deliberately chose to circumvent them and put their clients and investors at risk .’
The lawsuit was filed in federal court in the District of Columbia, and Changpeng Zhao (pictured) was named as a defender
In response to the news, Zhao said he has not seen the complaint.
He wrote on Twitter: “Our team is standing by to ensure systems are stable, including withdrawals and deposits. We will provide a response as soon as we see the compliance. Haven’t seen it yet. Media get the information before we do.’
This comes just months after the SEC filed criminal charges against FTX founder Sam Bankman-Fried for orchestrating a scheme to defraud investors.
FTX was a rival to Binance in the crypto trading world until Bankman-Fried’s company filed for bankruptcy last November.
Speaking of the Binance lawsuit today, SEC Chairman Gary Gensler said, “Through thirteen indictments, 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.
As alleged, Zhao and Binance misled investors about their risk controls and corrupt trading volumes, while actively concealing who operated the platform, the affiliate market maker’s manipulative trading, and even where and with whom investor funds and crypto assets were held.
“They tried to circumvent US securities laws by announcing sham audits that they ignored behind the scenes so they could keep valuable US customers on their platforms.
“The public should be wary of investing their hard-earned assets with or on these illegitimate platforms.”