The SEC alleges that, while Binance publicly claimed that Binance.US was a separate, independent trading platform for US investors, Zhao secretly controlled the US company behind the scenes.Īmong the products that Binance.US is alleged to have illegally offered its US customers are commodity derivatives – which effectively place a bet on the price of a cryptocurrency rather than buying it directly. However, the SEC alleges that in reality, Binance and Zhao “subverted their own controls to secretly allow high-value US customers to continue trading on the platform”. What is Binance and its founder accused of?Īmong the central allegations from the SEC is that Binance and Zhao failed to truly split the US company from the US exchange that it was spun off from.īinance.US says that, from 2019, its customers were restricted from transacting on. Binance.US would be subject to US regulations and therefore be able to operate legally within the country. In response, it restricted access to its main exchange – – in the US and launched a new business: Binance.US.īinance.US offered fewer crypto and digital assets than its parent company – but crucially, it was billed as an entirely separate exchange that was run independent of. In 2019, Binance was facing a regulatory crackdown in the US over a number of potential violations. As the company has faced a tougher regulatory environment, its share of the market has fallen – but it still accounts for around 50% of the monthly crypto exchange volume. ![]() Last year its trades accounted for up to 70% of the market, with billions of dollars pumped through the exchange every day. Through its online platform, the company offers simplified avenues for buying and selling cryptocurrencies and other digital assets, in exchange for small fees.īinance dominates crypto trading. What is Binance?īinance is the world’s largest cryptocurrency exchange. On Tuesday, the SEC accused another crypto platform, Coinbase, of putting customers at risk by operating as an “unregistered broker, exchange and clearing agency”. The SEC appears bent on a wider crypto crackdown, prompted by the collapse last year of the Bahamas-based FTX, whose founder, the US national Sam Bankman-Fried, has now been charged with securities fraud, money laundering and other offences. It has also extended its interests with venture capital investments as well as a $500m stake in Elon Musk’s Twitter. ![]() It also sponsored the 2021 Africa Cup of Nations tournament. The company sponsors the Italian football team Lazio and the Argentina national team. His net worth, though still sizable, sank as the crypto market soured last year.Binance handles billions in investments for many everyday investors, but the effects are likely to stretch far beyond the cloistered, online world of crypto. Zhao, who goes by CZ, founded Binance in 2017 and his soaring wealth saw him rapidly climb the ranks of the world’s richest. That’s the estimated net worth of Changpeng Zhao, according to Forbes’ real time tracker, ranking him as the world’s 172nd richest person. “The SEC’s real intent here, instead, appears to be to make headlines.” Forbes Valuation ![]() “It seems based on these developments that the SEC’s goal here was never to protect investors,” Binance wrote in a blog. Contraīinance strongly disputes the allegations leveled against it and said it will “vigorously” defend itself, adding that it has actively cooperated with the SEC’s investigation and “worked hard to answer their questions and address their concerns.” Although stressing it is taking the “allegations seriously,” Binance said enforcement action was unwarranted and said it is “disheartened” by the regulator’s approach, alleging regulatory “overreach” that damages the U.S.’ status as a global financial hub. It also follows a number of high profile failures, notably the collapse of Sam Bankman-Fried’s crypto exchange FTX and the failure of lenders Celsius and BlockFi. The lawsuit comes as key financial regulators, including the SEC and CFTC, which usually cooperate on such cases, vie for supremacy in regulating crypto and pay increasingly close attention to the industry. operations and reshape the sector as a whole. clients in March-the SEC is a powerful regulator and its allegations are serious and have the potential to both cripple Binance’s U.S. While this is not the first time Binance has faced regulatory scrutiny-the Commodity Futures Trading Commission sued the company for allegedly illegally serving U.S. The Securities and Exchange Commission (SEC) on Monday sued Binance and its chief executive Changpeng Zhao for allegedly mishandling funds, lying to regulators and violating an array of securities laws.
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