US sues Binance and CEO Zhao over 'web of deception'

STORY: The U.S. Securities and Exchange Commission filed more than a dozen charges against the world’s largest crypto exchange, Binance, and its CEO on Monday.

The watchdog accuses the company and its head Changpeng Zhao of misleading investors, operating what it calls an ‘extensive web of deception.’

The SEC says they Zhao and the exchange comingled billions of dollars’ worth of customers’ assets, or mixed with corporate funds, a breach of U.S. law and that those assets were secretly controlled by Zhao.

It also alleges Binance operated unlawfully as an unregistered exchange – and that Zhang designed and implemented a plan to quote ‘surreptitiously evade U.S. laws.’

Binance says it intends to “defend its platform vigorously”.

It said all user assets on its platforms are safe and secure, and since it is not a U.S. exchange, the SEC’s power is limited in reach.

Binance grew dramatically after the collapse of Sam Bankman-Fried’s FTX last November, but the SEC complaint is the latest in a series of legal challenges to the company.

In March, another regulator the CFTC alleged Binance helped commercially valuable U.S.-based “VIP customers” evade compliance control, even though the company’s global business policy said it restricted U.S. customers from trading on its platform since 2019.

Market players said the latest allegations from the SEC could hobble the company, with the lawsuit likely to reverberate through the crypto industry.