A message from the Binance chief compliance officer to a colleague, included in the evidence in the lawsuit, reads: “We are operating as a fking unlicensed securities exchange in the USA bro.” The SEC complaint includes evidence that the Binance leadership were aware that they were contravening US regulations. Another US regulator filed a lawsuit in March claiming that Binance had been offering these services since July 2019, despite not being registered with the derivatives markets regulator. The SEC alleges that, while Binance publicly claimed that Binance.US was a separate, independent trading platform for US investors, Zhao secretly controlled the US company behind the scenes.Īmong the products that Binance.US is alleged to have illegally offered its US customers are commodity derivatives – which effectively place a bet on the price of a cryptocurrency rather than buying it directly. However, the SEC alleges that in reality, Binance and Zhao “subverted their own controls to secretly allow high-value US customers to continue trading on the platform”. What is Binance and its founder accused of?Īmong the central allegations from the SEC is that Binance and Zhao failed to truly split the US company from the US exchange that it was spun off from.īinance.US says that, from 2019, its customers were restricted from transacting on. Binance.US would be subject to US regulations and therefore be able to operate legally within the country. In response, it restricted access to its main exchange – – in the US and launched a new business: Binance.US.īinance.US offered fewer crypto and digital assets than its parent company – but crucially, it was billed as an entirely separate exchange that was run independent of. In 2019, Binance was facing a regulatory crackdown in the US over a number of potential violations. As the company has faced a tougher regulatory environment, its share of the market has fallen – but it still accounts for around 50% of the monthly crypto exchange volume. Last year its trades accounted for up to 70% of the market, with billions of dollars pumped through the exchange every day. Through its online platform, the company offers simplified avenues for buying and selling cryptocurrencies and other digital assets, in exchange for small fees.īinance dominates crypto trading. What is Binance?īinance is the world’s largest cryptocurrency exchange. On Tuesday, the SEC accused another crypto platform, Coinbase, of putting customers at risk by operating as an “unregistered broker, exchange and clearing agency”. The SEC appears bent on a wider crypto crackdown, prompted by the collapse last year of the Bahamas-based FTX, whose founder, the US national Sam Bankman-Fried, has now been charged with securities fraud, money laundering and other offences. It has also extended its interests with venture capital investments as well as a $500m stake in Elon Musk’s Twitter. It also sponsored the 2021 Africa Cup of Nations tournament. The company sponsors the Italian football team Lazio and the Argentina national team. Binance handles billions in investments for many everyday investors, but the effects are likely to stretch far beyond the cloistered, online world of crypto.
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