SEC says crypto firm Binance mishandled funds, violated securities laws

The world's largest cryptocurrency exchange Binance and its founder Changpeng Zhao are accused of misusing investor funds, operating as an unregistered exchange and violating a slew of US securities laws in a lawsuit filed by the SEC.

Filed in the US District Court for the District of Columbia, the Securities and Exchange Commission lawsuit on Monday lists thirteen charges against the firm — including commingling and divert customer assets to an entity Zhao owned called Sigma Chain.

Binance is a Cayman Islands limited liability company founded by Zhao.

The lawsuit lays out the extent to which the firms owners knew of the alleged legal violations: "Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, “we are operating as a unlicensed securities exchange in the USA bro.”

SEC Chair Gary Gensler said in a written statement that Zhao and Binance “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law".

“The public should beware of investing any of their hard-earned assets with or on these unlawful platforms,” Gensler said.

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