UPDATED: Another U.S. regulator has sued Binance - the cryptocurrency exchange says it has become a target at the center of a "regulatory tug-of-war"

In the lawsuit filed by the US Securities and Exchange Commission (SEC), Binance owner Changpeng Zhao is mentioned.

Among other things, the cryptocurrency exchange and its CEO are accused of illegal activities and deceiving investors.

"Defendants enriched themselves with billions of dollars, risking significant investor assets," the document says.

According to the SEC, Binance and Zhao illegally attracted investors, participated in numerous unregistered investment schemes, and "misled shareholders, retail, and institutional investors about supposedly controlling manipulative trading on the Binance.US platform, which barely existed in reality."

The SEC lawsuit alleges that Binance acted as a broker-dealer, exchange, and clearing agency without proper registration. The commission also claims that the cryptocurrency exchange should have registered assets like the BUSD token (a stablecoin issued by Paxos) and the Binance BNB token as securities but failed to do so to avoid regulatory scrutiny.

Binance has long claimed that Binance.US operates separately from the main exchange. By publicly stating that the main cryptocurrency exchange did not serve individuals in the US, Zhao and other Binance employees allegedly helped accredited investors circumvent controls that could have prevented them from using the platform, according to the SEC.

The lawsuit also states that although Binance informed investors that it was implementing market manipulation control, it did not actually do so.

"As a result, the defendants failed to meet the basic requirements of registered exchanges - to have rules designed to prevent fraudulent and manipulative actions," the lawsuit says.

In particular, there was no monitoring of "wash trading," where a trader illegally buys an asset from an account already controlled by them, artificially inflating its price.

It should be noted that in March, another US regulator - the Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance. The 47-page allegations include accusations of ignoring US regulatory requirements and even terrorist activities against the cryptocurrency exchange and its owner.

Updated, 15:50: In an official statement, Binance states that they are "disappointed" by the SEC's complaint, especially after the "active cooperation" of the cryptocurrency exchange with the commission during the investigation. All accusations against Binance are rejected, and they claim to comply with all laws and regulations. As for the unregistered BNB - according to the cryptocurrency exchange, these are not securities but native tokens "intended for creating an internal economy."

Source: The Verge