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SEC Files 13 Charges Against Binance Entities and Founder Changpeng Zhao Charges include operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities. FOR IMMEDIATE RELEASE 2023-101 Washington D.C., June 5, 2023 — The Securities and Exchange Commission today charged Binance Holdings Ltd. (“Binance”), which operates the largest crypto asset trading platform in the world, Binance.com; U.S.-based affiliate, BAM Trading Services Inc. (“BAM Trading”), which, together with Binance, operates the crypto asset trading platform, Binance.US; and their founder, Changpeng Zhao, with a variety of securities law violations. Among other things, the SEC alleges that, while Zhao and Binance publicly claimed that U.S. customers were restricted from tr@nsacting on Binance.com, Zhao and Binance in reality subverted their own controls to secretly allow high-value U.S. customers to continue trading on the Binance.com platform. Further, the SEC alleges that, while Zhao and Binance publicly claimed that Binance.US was created as a separate, independent trading platform for U.S. investors, Zhao and Binance secretly controlled the Binance.US platform’s operations behind the scenes. The SEC also alleges that Zhao and Binance exercise control of the platforms’ customers’ assets, permitting them to commingle customer assets or divert customer assets as they please, including to an entity Zhao owned and controlled called Sigma Chain. The SEC’s complaint further alleges that BAM Trading and BAM Management US Holdings, Inc. (“BAM Management”) misled investors about non-existent trading controls over the Binance.US platform, while Sigma Chain engaged in manipulative trading that artificially inflated the platform’s trading volume. Further, the Complaint alleges that the defendants concealed the fact that it was commingling billions of dollars of investor assets and sending them to a third party, Merit Peak Limited, that is also owned by Zhao. The Complaint also charges violations of critical registration-related provisions of the federal securities laws: Binance and BAM Trading with operating unregistered national securities exchanges, broker-dealers, and clearing agencies; Binance and BAM Trading with the unregistered offer and sale of Binance’s own crypto assets, including a so-called exchange token, BNB, a so-called stablecoin, Binance USD (BUSD), certain crypto-lending products, and a staking-as-a-service program; and Zhao as a control person for Binance’s and BAM Trading’s operation of unregistered national securities exchanges, broker-dealers, and clearing agencies. “Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” said SEC Chair Gary Gensler. “As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied. They attempted to evade U.S. securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value U.S. customers on their platforms. The public should beware of investing any of their hard-earned assets with or on these unlawful platforms.” “We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk – all in an effort to maximize their own profits,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “By engaging in multiple unregistered offerings and also failing to register while at the same time combining the functions of exchanges, brokers, dealers, and clearing agencies, the Binance platforms under Zhao’s control imposed outsized risks and conflicts of interest on investors. Those risks and conflicts are only heightened by the Binance platforms’ lack of tr@nsparency, reliance on related-party tr@nsactions, and lies about controls to prevent manipulative trading. Despite their years-long efforts to not ‘be held accountable,’ today’s complaint begins the process of doing so.” UNREGISTERED EXCHANGE, BROKER, AND CLEARING AGENCY The SEC’s complaint, filed in the U.S. District Court for the District of Columbia, alleges that, since at least July 2017, Binance.com and Binance.US, while controlled by Zhao, operated as exchanges, brokers, dealers, and clearing agencies and earned at least $11.6 billion in revenue from, among other things, tr@nsaction fees from U.S. customers. The SEC’s complaint alleges that (1) with respect to Binance.com, Binance should have registered as an exchange, broker-dealer, and clearing agency; (2) with respect to Binance.US, Binance and BAM Trading should have registered as an exchange and as clearing agencies; and (3) BAM Trading should have registered as a broker-dealer. The SEC also alleges that Zhao is liable as a control person for Binance’s and BAM Trading’s respective registration violations. UNREGISTERED OFFER AND SALE OF CRYPTO ASSETS The SEC charged Binance for the unregistered offers and sales of BNB, BUSD, and crypto-lending products known as “Simple Earn” and “BNB Vault.” Further, the SEC charged BAM Trading with the unregistered offer and sale of Binance.US’ staking-as-a-service program. The complaint also notes that Binance secretly has control over assets staked by U.S. customers in BAM’s staking program. FAILURE TO RESTRICT U.S. INVESTORS FROM ACCESSING BINANCE.COM The SEC’s complaint alleges that Zhao and Binance created BAM Management and BAM Trading in September 2019 as part of an elaborate scheme to evade U.S. federal securities laws by claiming that BAM Trading operated the Binance.US platform independently and that U.S. customers were not able to use the Binance.com platform. The complaint alleges that, in reality, Zhao and Binance maintained substantial involvement and control of the U.S. entity and that, behind the scenes, Zhao directed Binance to allow and conceal many high-value U.S. customers’ continued access to Binance.com. In one instance, the Binance chief compliance officer messaged a colleague that, “[w]e are operating as a fking unlicensed securities exchange in the USA bro.” MISLEADING INVESTORS According to the SEC’s complaint, BAM Trading and BAM Management misled Binance.US customers and equity investors concerning the existence and adequacy of market surveillance and controls to detect and prevent manipulative trading on the Binance.US platform’s crypto asset trading volumes. The complaint further alleges that the strategic and targeted wash trading largely perpetrated by the Binance.US platform’s primary undisclosed “market making” trading firm Sigma Chain, also owned by Zhao, demonstrates the falsity of statements BAM Trading made about its market surveillance and controls. The SEC’s investigation into the violations with respect to the Binance.US platform was conducted by Kathleen Hitchins, Ann Rosenfield, and Colby Steele, with the assistance of Ainsley Kerr, John Marino, and Donald Battle and the supervision of Paul Kim. The investigation into the violations with respect to the Binance.com platform was conducted by Michael Baker, Donna K. Norman, and Martin Zerwitz, with the assistance of Sachin Verma and Alexander Lefferts and the supervision of Deborah A. Tarasevich. Both matters were overseen by Jorge G. Tenreiro and David Hirsch of the SEC’s Crypto Assets and Cyber Unit. The litigation is being led by Matthew Scarlato, Jennifer Farer, and J. Emmett Murphy, with the assistance of Hope Hall Augustini, and under the supervision of David Nasse, Olivia Ch0e, and Mr. Tenreiro.

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lmfao i been tellin yall crypto is a huge ponzi thats gon eventually go to ZERO.

its hilarious that many of yall stil gon cap and pretend its the future when even the largest player in the industry is buying yachts with customer funds and got senior leadership saying sh1t like

"we are operating as a fking unlicensed securities exchange in the USA bro"

JetLifeSwag said 🔗 lmfao i been tellin yall crypto is a huge ponzi thats gon eventually go to ZERO. its hilarious that many of yall stil gon cap and pretend its the future when even the largest player in the industry is buying yachts with customer funds and got senior leadership saying sh1t like "we are operating as a fking unlicensed securities exchange in the USA bro"

Imagine how stupid you have to be to write down sh1t like that. Enron guys were just as dumb...

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It's your time gawd

sh1ts fu#kin hilarious fr

this is probably the largest player in the crypto industry and they behaving worse then bernie madoff.

the crypto nerds on boxden still gon deny that crypto is a massive ponzi scheme

Boogersugar said 🔗 @🔗 It's your time gawd

the major disconnect with the crypto guys and the anti-crypto guys is they actually are both right on both monetary systems being technically "ponzi" schemes. crypto only works if everyone agrees it works and fiat only works if everyone agrees it works. they're both right. the point the crypto guys either deny or blissfully ignore is that the other ponzi scheme is backed by a whole fu#king lot more than computer servers and a shared grand new idea.

there's entire legal systems, there's history, there's overarching state power, there's fu#king military. this was always going to be the outcome for this venture. to be naive enough and think central banks and governments would just idly sit by and let yet another black market pop up but not just that but a possible replacement for their legal tender is fu#king playing yourself. not only that but it's not even permanent like say gold or silver is. your sh1t could be wiped out via any factor that destroys servers which holds your monetary information. the crypto guy would come back and say, "yeah just like your bank account" but the comeback remains the same... that bank account is BACKED by much more than your crypto account. i'm sorry this was never going to win. i feel like it will survive but it'll be relegated to very niche needs like it already has been. it'll be allowed to serve a specific purpose but anything greater than that it will never attain.

d.c. supreme said 🔗 the major disconnect with the crypto guys and the anti-crypto guys is they actually are both right on both monetary systems being technically "ponzi" schemes. crypto only works if everyone agrees it works and fiat only works if everyone agrees it works. they're both right. the point the crypto guys either deny or blissfully ignore is that the other ponzi scheme is backed by a whole fu#king lot more than computer servers and a shared grand new idea. there's entire legal systems, there's history, there's overarching state power, there's fu#king military. this was always going to be the outcome for this venture. to be naive enough and think central banks and governments would just idly sit by and let yet another black market pop up but not just that but a possible replacement for their legal tender is fu#king playing yourself. not only that but it's not even permanent like say gold or silver is. your sh1t could be wiped out via any factor that destroys servers which holds your monetary information. the crypto guy would come back and say, "yeah just like your bank account" but the comeback remains the same... that bank account is BACKED by much more than your crypto account. i'm sorry this was never going to win. i feel like it will survive but it'll be relegated to very niche needs like it already has been. it'll be allowed to serve a specific purpose but anything greater than that it will never attain.

Crypto will survive, but i don’t think it will be regulated and the days of crypto being an “investment” are dead. Crypto will go back to black market money like how it was in the early 2010s before the computer illiterate and gambling addicts got involved during COVID.

Crypto was meant to be currency like Fiat, meaning you trade the currency for goods and/or services. It was NEVER meant to be hoarded or ‘HODL’ed, and the hoarding mentality is what’s causing the downfall

justin747 said 🔗

Came in to tag you

Glad I pulled my sh1t out a while ago.

Not your keys, not your coins

justin747 said 🔗 Crypto will survive, but i don’t think it will be regulated and the days of crypto being an “investment” are dead. Crypto will go back to black market money like how it was in the early 2010s before the computer illiterate and gambling addicts got involved during COVID. Crypto was meant to be currency like Fiat, meaning you trade the currency for goods and/or services. It was NEVER meant to be hoarded or ‘HODL’ed, and the hoarding mentality is what’s causing the downfall

gotta re-read i said relegated not regulated

my point is exactly your point. it'll be relegated back to niche needs like black market sh1t. we're in agreement.

crypto nerds: hey you can use crypto for this , we'd like to get away from the govt control of currency and control because later down the line you'll be fu#ked over

everyone else: *doesn't use it for this*

crypto nerds: hey those guys are gonna scam you , this sh1t is unregulated be careful , defi is the way

everyone else: who gives a fu#k lets make some money

crypto scammers: hey give us some money

everyone else: sure no problem i dont know sh1t else to do to make a quick buck

crypto nerds: ...

crypto scammers: time to get outta here

everyone else: *loses money* its the crypto nerds fault!

crypto nerds: ...

crypto scammers: *chillin on an island*

crypto nerds: ... now we can get started

the crypto scam is apart of the bigger scam the stock market / banking industry , govt , fed reserve

crypto is the scapegoat , but we're past that

yall so far behind its crazy

its like 9/11 , back then we didn't think the US could do some sh1t like that , we called people crazy when they ranted about the patriot act and here we are now and we just accept it all , all that sh1t is a joke , that osama bin laden bullsh1t , anthrax , covid

so in the same fashion , i believe a lot of yall are behind and 20 years from now , will accept the govt manipulated us into a globalized dictatorship , stripped us of all are rights , and got yall to give up guns

XRP

Keithf87 said 🔗 XRP

Cripple and Ethereum are two of the biggest scams. 100% and majority premine but people thought they would make money from the scam so they turned a blind eye.

Neither is an actual cryptocurrency.

And all centralized exchanges are trash, a peer to peer currency does not need a centralized exchange. Having said that Binance is the worst of them, every piece of sh1t coin and Ethereum based token found a home on that sh1tty exchange.

00010111 said 🔗 Cripple and Ethereum are two of the biggest scams. 100% and majority premine but people thought they would make money from the scam so they turned a blind eye. Neither is an actual cryptocurrency. And all centralized exchanges are trash, a peer to peer currency does not need a centralized exchange. Having said that Binance is the worst of them, every piece of sh1t coin and Ethereum based token found a home on that sh1tty exchange.

You're right XRP is a DLP/T(Distributed Ledger Protocol/Technology)

Don't @ me n1gga.

00010111 said 🔗 Cripple and Ethereum are two of the biggest scams. 100% and majority premine but people thought they would make money from the scam so they turned a blind eye. Neither is an actual cryptocurrency. And all centralized exchanges are trash, a peer to peer currency does not need a centralized exchange. Having said that Binance is the worst of them, every piece of sh1t coin and Ethereum based token found a home on that sh1tty exchange.

Whats your opinion on monero (XMR)?

Buy the dip.

mourinho1 said 🔗 Whats your opinion on monero (XMR)?

It’s the real btc as per Satoshi’s white paper.

ANYWAY. . .tr@nsfer everything u have to Quant
all non legit ones are going to get flushed. ..


REMEMBER THIS CHARACTER. . gave up the bag for some internet fame..coulda sold for like 3 mill. .

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his nerdy friends tried to tell him to sell before SNL dropped..he coulda sold for 31 years of his current salary

he was stubborn

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It only dipped from 28k to 25k, the same range we been in for months, and this is the biggest card the SEC can possibly play. Honestly ive experienced worse crypto crises. Shake the weak out.

SEC can say & do what they want within the confines of America in order to protect its banking friends, but this is a global game.

Interesting

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They trying to make way for that fedcoin.

I can't find the article that I read last night, but if I find it, I'll post a screenshot. The SEC charged them for listing a couple of coins, and most of those coins that they charged them for listing got approved seven days ago by Hong Kong to be listed on their exchange. So, it seems like they're trying to retaliate. It appears they are suing Binance.us, not Binance.com. Also, it seems that people put more money into the Binance exchange since they started suing them. Interestingly, nobody's really taking their money out.