Both of them were run by Binance employees at the direction of Zhao to keep prices and trading volume high. The other, Merit Peak, was used internationally. One of them, called Sigma Chain, was primarily used to prop up Binance’s U.S. But one thing that’s definitely not good for an exchange is to have secret trading firms at the middle of it that secretly control the buying and selling of all the assets on the exchange - which, in this case, is exactly what Binance is accused of.Īt the center of the lawsuit are allegations that Binance is, like FTX, a sham propped up by trading firms that Zhao secretly controls - and that money diverted to these firms were used, in one instance, to buy an $11 million yacht. It’s supposed to stand in the middle of buyers and sellers and find a balance between them that keeps people coming back. It sounds obvious, but you can’t have a functional exchange if people don’t use it. The suit is long and complex, detailing the many alleged ways that Binance sought to evade accountability, but there are five essential things to know about how it all operated: Investors and speculators are seeing fewer and fewer reasons to believe that becoming crypto-rich is a realistic possibility, as depressed valuations and an expected onslaught of rules will probably continue to weigh on what once was functionally an anything-goes global casino accessible on any smartphone. Many of the industry’s once-brightest stars are in jail or being sued. The bigger picture, though, is that the SEC complaint marks another major negative moment for crypto after more than a year rife with such brutal milestones. In a statement, the company said it intends to defend itself and that the SEC doesn’t have the jurisdiction to file this suit anyway, given that Binance - at least in theory - doesn’t operate in the United States. What the suit alleges, though, stands in stark contrast to that image.īinance and Zhao aren’t accused of any crimes, but the allegations are the most serious made by the federal government against a standing crypto giant. Zhao also positioned himself as something of an anti–Bankman-Fried, a calm and steady truth-teller rather than a fidgety liar. Binance has stood alone as the only truly global giant crypto exchange, a go-to place for the buying and selling of just about every digital currency in the world.
#BINANCE ACCOUNT BALANCE SERIES#
Last year, Zhao effectively destroyed FTX in a series of tweets highlighting the financial rot at the core of Bankman-Fried’s crypto empire. The suit is also a rebuke to the invulnerable image created by Zhao, who goes by the initials CZ to his fans. “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 undercurrent here is that fraud, or at least deceit, was crucial to its business model. The scope of the suit is not only damning for Binance but signals that the crypto industry as it has operated for the past five years could be coming to an end. financial system while evading rules and safety measures. The 13-count, 136-page lawsuit offers a detailed picture of how the Cayman Islands-based exchange, which has no fixed address, has obtained money from the U.S.
Because this is a crypto fraud accusation, there’s even a mysterious $11 million yacht. Binance, the world’s largest crypto exchange, and its founder, Changpeng Zhao, are accused of running an anything-goes crypto casino that committed some of the same cardinal misdeeds that contributed to the downfall of Sam Bankman-Fried’s FTX - including stealing customer money and using secret trading firms to prop up the business, according to a suit filed by the Securities and Exchange Commission in federal court. sent a message to the digital currency industry: When it comes to crypto, nothing is too big to fail.
On Monday, securities regulators in the U.S.
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