SEC Charges Binance with Securities Law Violations
The SEC charged Binance Holdings Limited -- the largest international crypto asset trading platform -- along with its beneficial owner and affiliated entities, with numerous violations of the securities laws.
In a Complaint filed with the District Court for the District of Columbia, the SEC described the defendants as having "blatant disregard" for securities laws that placed investors’ assets at "significant risk." The SEC stated that the Binance platform (the "Platform") (i) unlawfully offered exchange, broker-dealer and clearing agency services without registering with the SEC, (ii) engaged in unregistered offers and sales of crypto asset securities while depriving investors of material information regarding risks and trends affecting their investments and (iii) made misrepresentations to investors while attracting "billions of dollars" in investor trading volume.
The SEC charged that the Platform was an effort to evade U.S. regulatory oversight. The SEC said that the Platform created entities in the United States which it claimed "independently controlled the operation of [the Platform]." In addition, the SEC asserted that the Platform purported to not serve U.S. persons but engaged in various stratagems of concealment to maintain its most valuable U.S. customers.
As a result, the SEC claimed that the Platform violated Securities Act Sections 5(a) and (c) ("Prohibitions relating to interstate commerce and the mails"); Exchange Act Sections 5 ("Transactions on unregistered exchanges"), 15(a) ("Registration and regulation of brokers and dealers") and 17A(b) ("National system for clearance and settlement of securities transactions") and Securities Act Section 17(a)(2) and (3) ("Fraudulent Interstate Transactions").
To settle the charges, the SEC requested that the Court order a (i) permanent enjoinment against further regulatory violations, (ii) disgorgement of any ill-gotten gains, (iii) civil monetary penalty and (iv) permanent bar against the owner, and enjoinment against all associated entities from engaging in the sale of securities.
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