SEC Sues Crypto Giant Binance for Alleged U.S. Rule Violations

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, the world's largest cryptocurrency exchange, and its CEO Changpeng Zhao, alleging that the company violated U.S. securities laws by operating an unregistered exchange and misusing customer funds.

According to the SEC’s complaint, BAM Trading Services Inc., which operates as an affiliate of Binance, misled customers and equity investors concerning the existence and terms of certain services offered on the platform. The SEC also alleges that BAM Trading Services Inc., along with its parent company BAM Management LLC, failed to register as a broker-dealer or alternative trading system in violation of federal securities laws.

In addition to these charges, the SEC accuses Zhao of personally participating in activities related to the alleged violations and failing to take adequate steps to prevent them from occurring. The agency is seeking injunctive relief, disgorgement of ill-gotten gains plus interest, civil penalties, and other remedies against all defendants named in the complaint.

The news comes at a time when regulators around the world are taking a closer look at cryptocurrency exchanges for potential violations of existing laws and regulations governing financial markets. This latest action by the SEC underscores its commitment to enforcing investor protection rules in this space and serves as a warning to other crypto exchanges that may be engaging in similar activities without proper registration or oversight from authorities.