The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, the largest cryptocurrency exchange, and its CEO, Changpeng Zhao. The SEC accused Binance of secretly controlling its U.S. operations to evade U.S. laws.
The charges include allegations of inflating trading volumes, mishandling customer funds, failing to restrict U.S. customers, and providing misleading information to investors.
As a result of the news, cryptocurrencies and shares of crypto-related companies experienced significant drops. Bitcoin, the most popular cryptocurrency, fell by 5.45%, reaching its lowest level since mid-March. Binance’s cryptocurrency also dropped by 9.72%.
This lawsuit by the SEC is part of its efforts to regulate the cryptocurrency industry, which the SEC Chair has described as the “wild West.” The crackdown has led some crypto companies to improve compliance measures, introduce new products, and expand globally.Binance stated that it has been cooperating with the SEC’s investigations and trying to address concerns for a settlement.
However, the SEC’s decision to pursue litigation instead of seeking a settlement demonstrates its aggressive stance toward the crypto industry.
Other well-known crypto companies, such as Coinbase and Kraken, have also faced regulatory challenges from the SEC. Coinbase disclosed in March that it had received a threat of a lawsuit from the SEC regarding some of its products.
The SEC’s charges against Binance resulted in a decline of shares for Coinbase by 9.1%, as well as decreases for crypto miners Riot Blockchain, Marathon Digital, and Hut 8 Mining.
