SEC Files 13 Charges Against Binance for Manipulation and Lack of Disclosure

By June 6, 2023The Sandbox
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The U.S. Securities and Exchange Commission (SEC) has filed a comprehensive lawsuit against Binance. On Monday, June 5, the SEC lodged the lawsuit in federal court, outlining 13 distinct charges. Essentially, the SEC accuses Binance of mishandling customer funds and providing false information to regulators and investors about its operations. So, let’s take a closer look.


  • The SEC has filed a detailed lawsuit against Binance, the world’s largest cryptocurrency exchange.
  • The SEC accuses Binance and its founder, Changpeng Zhao, of actively engaging in deceptive practices, conflicts of interest, and evading the law, as detailed in thirteen charges.
  • Binance has hired new compliance officials, including a former federal prosecutor, to address the SEC’s concerns.
    Binance in Hot Water: SEC Accuses World's Largest Crypto Exchange of Covert Practices
    Binance in Hot Water: SEC Accuses World’s Largest Crypto Exchange of Covert Practices.

SEC Launches Thorough Lawsuit Against Binance, Alleging Deception and Manipulation

The SEC has filed a thorough lawsuit against Binance, the world’s largest cryptocurrency exchange. SEC Chair Gary Gensler stated that through thirteen charges, they allege Zhao and Binance entities were involved in deceptive practices, conflicts of interest, lack of transparency, and deliberate attempts to evade the law. Moreover, the allegations include misleading investors about risk controls, manipulating trading volumes, concealing platform operators, manipulative trading by affiliated market makers, and hiding the custody of investor funds and crypto assets.

The SEC has accused Binance of commingling customer funds, which means mixing them together, to the tune of billions of dollars. They allege that these funds were covertly transferred to another company called Merit Peak Limited. Apparently, Binance’s founder, Changpeng Zhao controls this company.

Furthermore, the allegations against Binance involve misleading investors about its systems’ effectiveness in detecting and preventing manipulative trading. The SEC also claims that Binance did not take sufficient measures to prevent U.S. investors from accessing its unregulated exchange.

In addition, the legal complaint identifies several individual tokens that the SEC considers to be securities. These tokens include BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, ALGO, COTI, SAND (The Sandbox), MANA (Decentraland), and AXS (Axie Infinity).

Binance Founder Takes to Twitter Amidst SEC allegations
Binance Founder Takes to Twitter.

Binance Bolsters Compliance Team Amid Escalating Legal Pressure

Now, let’s take a look at how Binance responded to the allegations. The company released a blog post. Here, they stated, “We are disappointed that the U.S. Securities and Exchange Commission chose to file a complaint today against Binance.”

They continued, “Today’s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology.” Additionally, Binance founder, Zhao, tweeted the company’s official response to the allegations, stating that the SEC is attempting to unilaterally shape the crypto market.

The recent lawsuit against Binance is part of the U.S. regulators’ ongoing efforts to bring regulation to the cryptocurrency trading industry. So far, this has lacked comprehensive oversight. Of course, the regulators’ goal is to ensure that major players in the industry follow U.S. laws. However, there is debate and differing opinions about whether the approach of enforcing regulations through litigation is effective and fair. This is including within the SEC.

So, what does this mean for Binance? Ultimately, Binance is facing increasing legal pressure. To maintain its reputation and address SEC concerns, Binance has hired new compliance officials. This includes a former federal prosecutor leading its compliance efforts.

All investment/financial opinions expressed by are not recommendations.

This article is educational material.

As always, make your own research prior to making any kind of investment.

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