Binance, one of the world’s largest cryptocurrency exchanges, has expressed its disappointment with the recent allegations made by the U.S. Securities and Exchange Commission (SEC).
The SEC’s lawsuit accuses Binance of mishandling funds, operating as an unregistered exchange, and selling unregistered securities. Binance, along with its CEO Changpeng Zhao, Binance.US, and BAM Trading, are named as defendants in the lawsuit.
Binance’s Response to the Lawsuit:
In a statement, Binance expressed its disappointment with the SEC’s decision to litigate instead of continuing the good-faith discussions aimed at reaching a negotiated settlement.
The exchange stated that it had made efforts to resolve the SEC’s investigations but was disheartened by the SEC’s choice to act unilaterally. Binance.US also tweeted that the filing was unjustified based on the facts, the law, and the SEC’s own precedent.
Comparison to Coinbase’s Legal Battle:
Binance drew parallels between its lawsuit and the ongoing legal battle between Coinbase and the SEC. The exchange criticized the SEC’s approach, stating that it used enforcement and litigation instead of a thoughtful and nuanced approach required by the complex nature of the technology.
Binance argued that unilaterally labeling certain tokens and services as securities, even when other U.S. authorities claim jurisdiction, exacerbates the regulatory challenges.
Binance’s Defense against Allegations:
Binance directly refuted the SEC’s allegations that Binance.US commingled user funds, emphasizing that user assets are safe and secure.
The SEC’s lawsuit claimed that Binance and Zhao, through controlled accounts, commingled billions of dollars of customer funds in an account held by a Zhao-controlled entity. The funds were then allegedly transferred to a third party for the purchase and sale of crypto assets.
Unlawful Offerings and Lack of SEC Registration:
The SEC’s lawsuit also accuses Binance and BAM Trading, under Zhao’s leadership and control, of unlawfully offering three essential securities market functions—exchange, broker-dealer, and clearing agency—on the Binance Platforms without registering with the SEC.
The lawsuit suggests that despite being aware of the registration requirements, Binance and its entities deliberately chose not to register to evade regulatory oversight meant to protect investors and markets.