The Securities and Exchange Commission (SEC) of the United States has filed a lawsuit against Binance, a famous cryptocurrency exchange. They are concerned about the security of around $2.2 billion in customer assets held by Binance’s US subsidiary. According to the SEC, Binance’s founder Changpeng Zhao and the firm have strong oversight over these funds. This puts them in danger and violates regulations.
The SEC has filed an emergency application to get a temporary restraining order, freezing these assets and preventing any illegal transfers. In addition, the regulator claims that Binance engaged in unapproved securitization sales and was involved in investor funds. They claim that if the money is not frozen, the founder, Changpend Zhao, could steal it.
According to the SEC’s legal brief, Changpeng Zhao is a foreign national who believes he is not subject to US jurisdiction. Furthermore, years of contact between the SEC and Binance show that Binance.US was unable to determine who controlled customer assets. According to the SEC, Zhao and Binance had complete control over consumer assets worth billions of dollars.
🚨💰 #Binance allegedly puts $2.2 Billion of clients’ assets at risk.
— Walletor (@walletorapp) June 7, 2023
While Binance’s US branch claims ownership over its technical and financial systems, the SEC claims that Zhao’s ultimate control puts investor money in danger. The SEC emphasizes the need of taking fast action to protect clients of the platform.
The SEC additionally asks for authorization to serve Zhao through email through his lawyers, alleging challenges verifying his specific location or movements.
What’s Next for Binance?
As digital currencies gain popularity, protecting investor safety and market integrity becomes increasingly important. Moreover, this case highlights the importance of established regulatory frameworks and control in the blockchain world.
Finally, the SEC’s case against Binance raises worries about the security of user assets. The SEC is seeking a freezing order to avoid Binance’s founder from misappropriating assets. The outcome of this judicial dispute will have ramifications for the crypto exchange regulation.