The Securities and Exchange Commission (SEC) of the United States has filed a lawsuit against Binance and its CEO, Changpeng Zhao. Binance was accused by the SEC of secretly controlling its US operations in order to avoid US laws.
Allegations on Binance
Allegations include inflating trading volumes, mishandling customer funds, failing to restrict US customers, and providing investors with misleading information.
As a result of the news, cryptocurrencies and shares of crypto-related companies fell precipitously. The most popular cryptocurrency, Bitcoin, fell 5.45%, reaching its lowest level since mid-March. Binance’s cryptocurrency fell 9.72% as well.
The SEC’s lawsuit is part of the SEC’s efforts to regulate the cryptocurrency industry, which the SEC Chair has described as “wild West.”
Because of the crackdown, some cryptocurrency companies have improved their compliance measures, introduced new products, and expanded globally.
Binance stated that it has been cooperating with the SEC’s investigations and has been attempting to address concerns in order to reach a settlement.
However, the SEC’s decision to sue rather than settle demonstrates the SEC’s aggressive stance toward the crypto industry.
Other well-known cryptocurrency firms, such as Coinbase and Kraken, have also faced SEC regulatory challenges. Coinbase disclosed in March that the SEC had threatened it with a lawsuit over some of its products.
The SEC’s charges against Binance resulted in a 9.1% drop in Coinbase shares, as well as drops for cryptocurrency miners Riot Blockchain, Marathon Digital, and Hut 8 Mining.
To read our blog on “33% of Pakistani crypto investors hedge against PkR collapse,” click here