US SEC Sues Binance and Its Founder

The United States Securities and Exchange Commission (SEC) has taken legal action against Binance, the world's largest cryptocurrency exchange, as well as its CEO and founder, Changpeng Zhao. 

The SEC's lawsuit accuses Binance of multiple violations, including the failure to restrict US customers from its platform, misleading investors about its market surveillance controls, and operating an unregistered securities exchange.

Binance and Zhao are alleged to have secretly controlled customers' assets, allowing them to combine and divert customer funds at their discretion. The SEC also claimed that a Binance-affiliated firm engaged in wash trading, artificially inflating the trading volume of crypto asset securities on the Binance platform.

In response to the lawsuit, Binance has said it will defend its position vigorously. The exchange emphasized that, as a non-US entity, the SEC's jurisdiction and authority are limited in scope.

The news of the SEC lawsuit had an immediate impact on the cryptocurrency market. Bitcoin, the world's largest cryptocurrency, shed 6% in value, reaching its lowest point in almost three months. BNB, Binance's own cryptocurrency and the fourth-largest by market size, also dropped over 5%.

This legal challenge is the latest in a series of difficulties faced by Binance. In March, the exchange was sued by the US Commodity Futures Trading Commission for allegedly operating an illegal exchange and running a wilfully ineffective compliance program.

Industry experts believe that the SEC's allegations could hamper Binance and the wider crypto industry. Binance is the dominant exchange in crypto trading, processing up to $65 billion in trades daily, with approximately 70% of the market.