The US Securities and Exchange Commission (SEC) has accused Binance and its CEO Changpeng Zhao of violating US securities regulations. The allegation will lead to a significant escalation of the legal issues facing cryptocurrency exchanges. The SEC suspects the crypto exchange violates investor protection regulations, operates unregistered exchanges, misrepresents trade control rules, and sells unregistered securities.
“Based on the thirteen counts of charges, we allege that Zhao and Binance engaged in an extensive network of deception, conflicts of interest, secrecy and willful evasion of the law.SEC Chairman Gary Gensler said in a statement. — The public should be wary of pouring their hard-earned fortune into these illicit platforms.”
The new filing follows a lawsuit filed in March by the US Commodity Futures Trading Commission (CFTC) alleging that Binance and Zhao personally regularly flouted the rules. The regulator accused the crypto exchange of facilitating illegal activities and trade manipulation. Zhao called the lawsuit “disappointing” and vowed to continue working with regulators.
The SEC suspects Binance of illegal trading in digital assets, specifically the BNB token. The Commission considers the BNB token, like the BUSD stablecoin, to be securities. The issuance of BUSD was banned by US regulators back in February. In addition to these two crypto assets related to Binance, the SEC also handles Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA). Algorand (ALGO), Axie Infinity (AXS) and COTI (COTI).
Virtual currencies can fall under SEC jurisdiction if investors buy them to fund a company or project with the intention of making a profit. This definition is based on a 1946 US Supreme Court decision defining investment contracts.