US sues Binance and its billionaire founder, Zhao

US regulators filed a lawsuit against Binance and Changpeng Zhao, the company's CEO, for allegedly running a "web of deception."

The lawsuit piled further pressure on the world’s most significant cryptocurrency exchange while sending bitcoin to its lowest value in nearly three months.

The Securities and Exchange Commission (SEC) filed a complaint in federal court in Washington, D.C., listing thirteen allegations against Zhao, Binance, and the owner of its ostensibly independent US exchange.

According to the SEC, the trading company Binance allegedly inflated its trading volumes artificially, failed to bar US users from using its platform, misled investors about its market surveillance controls, and stole customer money.

Additionally, the SEC claimed that Binance and Zhao, the firm’s billionaire founder, secretly controlled customers’ assets, allowing the firm to blend and divert investor funds as they pleased.

In the complaint, the SEC claimed Binance created distinct US entities as part of a complex scheme to avoid US federal securities laws. 

According to the SEC, Sigma Chain, a trading company owned and controlled by Zhao, engaged in so-called wash trading from almost three years ago until June 2022. This practice artificially inflated the trading volume of crypto asset securities on the Binance US service.

In a statement, the SEC Chair Gary Gensler said that the organization alleged that the Binance entities and Zhao participated in an elaborate web of deception, lack of disclosure, conflicts of interest, and calculated evasion of law.