SEC files charges against Binance

A crash on the crypto market is looming. Blame is apparently an indictment by the US Securities and Exchange Commission (SEC) against the Binance crypto exchange. The allegations weigh heavily.

Crypto market crash

A crash in the crypto market occurs. Bitcoin (BTC) lost three percent of its value in the last hour alone. The largest cryptocurrency is trading at $25,800. But not only the Bitcoin price is in the red

Many other cryptocurrencies are also affected by a crash. The biggest losers are Pepe, Decentraland and SUI. The three cryptocurrencies have lost 7.40 to 8.50 percent in the last 60 minutes alone.

Other cryptocurrencies connect seamlessly to the hour losers. A total of 31 of the 100 largest cryptocurrencies lose more than four percent of their value in just under an hour.

It could be a flash crash. Even as this article is being written, rates are changing rapidly.

SEC files charges against Binance

But what is moving the crypto market so suddenly? The US Securities and Exchange Commission has filed charges against Binance. The SEC’s allegations weigh heavily. The largest crypto exchange in the world is said to have operated illegally in the USA, according to a press release from the authority .

In addition, the SEC’s lawsuit also includes the usual allegations that target crypto companies. Binance is said to have sold unregistered securities. The SEC classifies many cryptocurrencies as de facto securities that are illegally not registered with the SEC – accused cryptocurrencies also include Binance’s own creations BUSD and BNB.

At the same time, Binance worked illegally as a securities broker. In addition to the international company Binance Holdings Ltd. based in the Cayman Islands, the defendants also include a US subsidiary called BAM Trading Services Inc. and Binance founder and CEO Changpeng Zhao (CZ).

BAM Trading operates Binance’s US subsidiary, officially trading as Binance.US. The SEC explains the allegations as follows:

“Among other things, the SEC alleges that while Zhao and Binance publicly stated that US clients are barred from trading on Binance.com, in reality Zhao and Binance continue to avoid their own controls to secretly allow high value US clients to trade on the Binance.com platform.”

In addition, Binance.US did not have the independence declared by Binance. Although the operational business was formally run by a managing director named Brian Shroder, in reality CZ pulled the strings.

Binance embezzling client funds?

The allegations by the SEC also include allegations that Binance is embezzling customer funds. This theory has been around for a long time. A former attorney for the SEC expressed such suspicions back in March.

Binance should use the custody system of its own trading platform in a targeted manner in order to use customer funds for its own purposes. The SEC has obtained strong evidence that CZ is diverting customer deposits to another company called Sigma Chain .

CZ is under the full control of Sigma Chain. He also uses the company to commit market manipulation. The company is said to have a trading account on Binance.US, which is being used to synthetically inflate the trading volume of the platform, making it appear more popular than it actually is.

Another billions in customer deposits are to flow to an additional company CZs, which bears the name Merit Peak Limited . The SEC considers the fact that Binance customers are left in the dark about the money movements to be fraudulent.

“Thirteen counts allege that Zhao and the Binance entities are engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law.” Explains SEC President Gary Gensler.

“They tried to circumvent US securities laws by announcing sham controls which they flouted behind the scenes.” Execute Gensler.

In March, the US supervisory authority CFTC brought charges against Binance . Your allegations sound similar. The procedure is still ongoing. Internal statements from CZ also suggest that Binance deliberately broke some laws .

In a counterstatement, Binance is disappointed. The company believes that this is another step the SEC wants to take to combat the crypto industry. With the indictment, the authority is trying to establish a precedent.