SEC sues Binance.US and Changpeng Zhao for endangering customer funds.
The United States Securities and Exchange Commission (SEC) has filed another document in its lawsuit against Binance.US, claiming that investors’ funds are in danger.
In the document submitted on June 5, the regulators allege that the defendants, which include Binance CEO Changpeng “CZ” Zhao, BAM Management, BAM Trading, and Binance, “have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.”
The filing also states that the defendants made “deliberate efforts” to circumvent U.S. regulatory oversight while providing securities-related services to U.S. users.
“[This] puts the safety of billions of dollars of U.S. investor capital at risk and at Binance’s and Zhao’s mercy.”
A report from CNBC suggests that the amount cited by the SEC goes as high as $2.2 billion.
The filing provides an example of billions of U.S. dollars in customer funds from both Binance and Binance.US being “mixed” in an account operated by a “Zhao-controlled entity,” identified as Merit Peak Limited.
The filing claims that the funds were then transferred to a third party “apparently in connection” with the purchase and sale of crypto assets.
Related: SEC’s Gensler claims ‘parallels’ between Binance and FTX, yet one wasn’t sued
According to the regulators, this arrangement has given, and continues to give, Zhao “free reign” over billions of deposited assets on the Binance.US platform, “with no oversight or controls to ensure that the assets are properly secured.”
At the time of writing, Binance.US has stated that user funds on the platform “remain safe” despite the SEC’s attempts to freeze assets.
On June 6, U.S. regulators filed a motion for a restraining order against Binance due to mishandling user funds and operating with unregistered securities. The freezing of assets was one of the requested actions included in the motion.
In its lawsuits against Binance and blockchain, the regulator has classified at least 67 different cryptocurrencies as securities, affecting over $100 billion worth of tokens in the market.
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