US SEC sues Binance, founder Zhao alleging securities law violations

The world’s largest crypto exchange Binance and its CEO Changpeng Zhao operated a “web of deception” that included artificially inflating its trading volumes and diverting customer assets, the US Securities and Exchange Commission alleged on Monday.

The agency on Monday sued Binance and Zhao for failing to restrict US customers from its platform and misleading investors about its market surveillance controls, as well as for operating an unregistered securities exchange.

The SEC’s complaint, filed in federal court in Washington, DC, also alleged that Binance and Zhao secretly control customers’ assets, allowing them to commingle and divert customer funds, and that Binance created separate US entities “as part of an elaborate scheme to evade US federal securities laws.”