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Binance Charged With Running Illegal Crypto Exchange in New SEC Complaint

The world's largest crypto exchange is accused of engaging in "an extensive web of deception" in a new complaint filed by the SEC.

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Mobile phone with on screen logo of binance surrounded by 100 dollar bills and golden crypto and ethereum coins.
Photo: K.unshu (Shutterstock)

Binance was hit with a new lawsuit from the U.S Securities and Exchange Commission Monday. The federal regulator unleashed 13 charges against the world’s largest crypto exchange and its founder Changpeng Zhao Monday, alleging violations of U.S. securities law, accusing the company of operating an illegal exchange.

“Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” SEC Chair Gary Gensler said in a press release.


The charges include operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance US platform; and the unregistered offer and sale of securities.

The complaint goes on to say, “This case arises from Defendants’ blatant disregard of the federal securities laws and the investor and market protections these laws provide. In so doing, Defendants have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.”


Binance pushed back against the complaint, calling it a move to unilaterally define the crypto market structure. “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,” Binance wrote in a statement.

Binance maintains it’s willing to “cooperate with regulators” despite rather combative comments coming from the top back in 2018. According to the complaint, Zhao has long tried to “escape the registration requirements of the federal securities laws.” Under Zhao’s control, the Chief Compliance Officer is quoted as saying, “we do not want [Binance].com to be regulated ever.”

The SEC has its sights set on several cases involving crypto, including a warning sent to Coinbase in March notifying the company that it could expect an enforcement action. Coinbase has since hit back with its own lawsuit against the SEC asking the regulators for clearer rules regarding whether crypto definitively counts as a security.

SEC regulators are also investigating jailed crypto founder Do Kwon, the CEO of Terraform Labs and its infamously unstable stablecoin Terra. The SEC alleged he and his company transferred 10,000 bitcoin worth hundreds of millions of dollars out of the Terra/Luna project before it inevitably went bust in May last year.


How to best regulate crypto has long been the topic of conversation both in Washington and across the globe. The infamous rise and fall of Sam Bankman-Fried’s FTX highlighted a dire need to do more to protect investor’s assets.