The US Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, the largest cryptocurrency exchange, and its founder and chief, Changpeng Zhao. The SEC alleges that they have violated federal securities laws, as reported by Reuters based on court records. The news has resulted in a weakening of the largest cryptocurrency, bitcoin. Binance has refuted the accusations.
According to the SEC, Binance and Zhao failed to implement measures to prevent US customers from accessing their platform. The company is accused of breaching investor protection regulations by operating unregistered exchanges, misrepresenting trading controls, and selling unregistered securities, among other violations.
In a statement, SEC Chairman Gary Gensler stated, “Through the 13 charges, we allege that Zhao and Binance entities engaged in a widespread network of fraud, conflicts of interest, inadequate disclosure, and deliberate evasion of the law.” He urged the public to exercise caution when investing their hard-earned assets with them.
Zhao reported on Twitter that his team will investigate the matter. Binance has vehemently denied the allegations and asserted that user assets were never at risk. The company described the lawsuit as baseless and vowed to defend itself. It emphasized its nearly 2.5 years of cooperation with the SEC in good faith and called on the US Congress to establish a practical regulatory framework for digital assets.
In March, Binance and its executives, including CEO Changpeng Zhao, were sued by the US Commodity Futures Trading Commission (CFTC) for regulatory violations.
Binance currently dominates the global digital asset sector, with its main exchange, Binance.com, ranking as the world’s largest cryptocurrency exchange. According to CryptoCompare, it processed trades worth approximately $23 trillion (CZK 505 trillion) last year.
Following the news, cryptocurrencies have experienced a depreciation in value. Bitcoin has declined by about five percent to $25,820, according to specialist server CoinDesk at around 18:45 CET. The second-largest cryptocurrency, ether, has depreciated by 4.5 percent. Shares of rival exchange Coinbase have dropped by over ten percent.