In a note published on Monday (5), the US Securities and Exchange Commission (SEC) points out that it has filed 13 lawsuits against Binance, including its affiliates such as Binance.US and BAM Trading.
Binance founder and CEO Changpeng Zhao is also being charged with what the SEC has defined as a “Variety of Securities Law Violations.”
As a result, Bitcoin is facing a 5% drop in the past few minutes. Trading in the $25,500 range, this is the lowest level since mid-March. Other cryptocurrencies are also operating in sharp declines, most notably Binance Coin (BNB).
The SEC’s allegations about Binance and Changpeng Zhao
Among the allegations, the SEC alleges that Binance.com served US customers. Furthermore, note that Binance.US is also managed ‘secretly’ by Changpeng Zhao.
Another company mentioned is BAM Trading. According to the SEC, both Binance and BAM, both managed by Zhao, were unregulated and offered unregistered cryptocurrencies to their customers, citing Binance Coin (BNB) and Binance USD (BUSD) as examples. Other products such as cryptocurrency staking were also mentioned.
“By means of thirteen indictments, we state that [Changpeng] The entities of Zhao and Binance are embroiled in a vast web of fraud, conflict of interest, lack of disclosure and calculated evasion of the law.”said SEC Chairman Gary Gensler.
“We argue that Zhao and the Binance entities not only knew the rules of the road, but also consciously chose to avoid them and endanger their customers and investors – all in an effort to maximize their own profits”added Gurbir S. Grewal, director of the SEC’s Enforcement Division.
Next, the SEC note references some key points of the indictment. Are they:
- exchange, unregistered brokerage and clearing house;
- Supply and sale of unregistered cryptocurrencies;
- Cannot deny US investors access to Binance.com;
- Misleading investors.
One of the points mentions that the director of compliance at Binance sent a message to a colleague saying so “We operate like a goddamn unlicensed exchange in the US, man.”
Binance CEO claims he has not been noticed yet
Taking to Twitter, Changpeng Zhao stated that his team will issue a response once the SEC is notified, noting that the media learned about the matter before he did.
“Our team is on hand to ensure systems are stable, including withdrawals and deposits”Binance’s CEO tweeted following the SEC news. “We will respond as soon as we receive the complaint. I haven’t seen yet. The media gets the information before we do.”
4.
Our team is on hand to ensure systems are stable, including withdrawals and deposits.
We will provide a response as soon as we see the complaint. Haven’t seen it yet. Media get the information before we do.
🙏
— CZ 🔶 Binance (@cz_binance) June 5, 2023
As usual, Zhao left the number 4 in the message, but that was not enough to calm down the cryptocurrency market, which is operating in a sharp decline.
Rumors about Binance’s new CEO
Even before the SEC news, there were rumors that Changpeng Zhao could pass his role as CEO of Binance to Richard Teng, currently responsible for the Asia, Europe and Middle East and North Africa regions.
Both Bloomberg and Coindesk stressed that Teng would be ready to take control of the exchange. However, the broker claimed that this was just media speculation.
“Teng has emerged as the favorite to take over as CEO should Zhao resign”wrote Bloomberg, quoting “people with direct knowledge of the subject.”
CoinDesk cited another anonymous source, but also pointed to Teng’s name as Zhao’s successor.
“Both senior leadership and regulators discussed behind closed doors that Richard Teng is the only leader who could take over from CZ.”
In response to CoinDesk, Teng stated that speculating would be this “premature”but noted that it is gaining space in the brokerage industry.
Bitcoin and other cryptocurrencies work in the fall
At the time of writing, Bitcoin is trading at USD 25,500 after falling 5% on news of the SEC lawsuit against Binance and its CEO, Changpeng Zhao.
Other cryptocurrencies are also operating in sharp declines. After all, Binance is the largest crypto exchange in the world and the news shocked the market. Ethereum (ETH) was another giant that immediately lost 5% of its value.
However, the biggest loss was for Zhao’s own cryptocurrency, Binance Coin (BNB). After breaking the support at $300, BNB plummeted to $272, trading at a daily drop of 10%.
In the top 100, cryptocurrencies such as Pepe (PEPE), Sui (SUI), and Conflux (CFX) were the biggest losers, with losses exceeding 15%.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
