Binance Will ‘Vigorously’ Defend Crypto Trading Platform From SEC Charges

The Securities and Exchange Commission (SEC) has filed 13 charges against Binance and its founder Changpeng Zhao in U.S. District Court in Washington, D.C.

The charges against the crypto asset trading platform include a variety of securities law violations, the SEC said in a Monday (June 5) press release.

“Through 13 charges, 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,” SEC Chair Gary Gensler said in the release.

Binance responded with a Monday blog post saying it is “disappointed” with the SEC’s decision because Binance has cooperated with the regulator’s investigations, worked to address its concerns and aimed to reach a negotiated settlement.

“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,” the company said in the post. “We intend to defend our platform vigorously.”

The SEC’s charges include operating as unregistered exchanges, brokers, dealers and clearing agencies; making unregistered offers and sales of crypto assets; failing to restrict U.S. investors from accessing Binance.com; and misleading investors, according to the SEC press release.

The charges name Binance Holdings Ltd., BAM Trading Services and Zhao. Binance operates the crypto asset trading platform Binance.com, while BAM Trading Services, which is its U.S. affiliate, operates Binance.US together with Binance, the release said.

Among the SEC’s allegations are that Zhao and Binance allow U.S. customers to trade on the Binance.com platform while saying publicly that they restrict U.S. customers; that Zhao and Binance control the Binance.US platform while saying publicly that the platform is independent; and that Zhao and Binance control the assets of both platforms’ customers and commingle or divert those assets, per the release.

“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,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in the release.

In its response, Binance said all user assets on the two platforms are “safe and secure,” that the SEC has refused to provide guidance and clarity to the digital asset industry, and that “regulation by enforcement” is not the way to develop an effective regulatory framework.

“We will work alongside industry partners to defend this important technology from misguided lawsuits,” the company said in the post. “And we will maintain our unceasing efforts to deliver a safe and trusted platform for our users that holds true to our core value of furthering the freedom of money.”

The SEC’s charges come on the same day that Reuters reported that bank records show that Binance senior executive Guangying Chen controlled five bank accounts belonging to Binance.US, including one containing American customers’ funds.

The charges also come about two weeks after Binance took to Twitter to attack a Reuters report that the cryptocurrency exchange commingled customer funds with its own revenue.