The agency on Monday sued Binance and Zhao for failing to restrict U.S. customers from its platform and misleading investors about its market surveillance controls, as well as for operating an unregistered securities exchange.
The SEC also alleged that from at least September 2019 until June 2022, Sigma Chain, a trading firm owned and controlled by Zhao, engaged in wash trading that artificially inflated the trading volume of crypto asset securities on the Binance.US Platform.
Binance did not immediately respond to a request for comment on the charges. In a tweet, Zhao said Binance would issue a response once it has reviewed the SEC’s complaint, and said the exchange’s team is “standing by, ensuring systems are stable, including withdrawals, and deposits.”
The move is the latest in a series of legal woes for Binance, which was also sued by the U.S. Commodity Futures Trading Commission (CFTC) in March for operating what the regulator alleged were an “illegal” exchange and a “sham” compliance program, with Zhao calling those charges “disappointing and an incomplete recitation of facts. Binance is also under investigation by the Justice Department for suspected money laundering and sanctions violations, according to people familiar with the probe.
While its holding company is based in the Cayman Islands, Binance says it does not have a headquarters and has declined to state the location of its main Binance.com exchange.
The firm has processed at least $10 billion in payments for criminals and companies seeking to evade U.S. sanctions, Reuters has previously reported.
financial rules that require client money to be kept separate.
(Reporting by Jonathan Stempel in New York, Hannah Lang in Washington and Tom Wilson in London, Editing by Nick Zieminski)