The US Securities and Exchange Commission (SEC) sued Binance, its CEO and founder Changpeng Zhao, and the operator of Binance.US on Monday, in a dramatic escalation of regulators’ control of the sector. americans. A day later, the SEC sued the major US exchange Coinbase.
Binance.US said in the notice to its clients that it would no longer accept dollar deposits as part of its plans to become a “Cryptocurrency-Only Exchange.” Binance.US called the SEC’s civil allegations “unwarranted” and stated that it would defend itself “vigorously.”
The SEC alleged in 13 counts Monday that Binance weaved a “web of deceit” in which it artificially inflated trading volumes and siphoned off client funds, as well as failing to restrict US client access to its platform.
The SEC asked a federal court on Tuesday to freeze Binance’s US assets. Binance.US called the petition “unwarranted,” stating that it had addressed SEC concerns about the security of client assets.
The SEC said it had not received “sufficient assurances” that Binance.US client assets were controlled by its operator, BAM Trading, “and not under the control or influence of Binance or Zhao, a person who has expressed openly wanting to circumvent compliance with US law.
Zhao and Binance had “free rein” to manage Binance.US assets, the SEC said. “They have exercised this control over the assets of US investors without supervision or controls to ensure that those assets are properly insured,” he added.
Binance did not immediately respond to a request for comment. Binance has said that he will “vigorously defend the platform” and that the SEC’s reach is limited as Binance is not a US exchange.
Binance.US client assets amount to more than $2.2 billion in cryptocurrencies and about $377 million in dollar bank accounts, according to the SEC.