SEC sues Binance for unregistered securities operations.

The United States Securities and Exchange Commission (SEC) has taken legal action against Binance, its U.S. platform, and CEO Changpeng Zhao (CZ) in the District Court for the District of Columbia on June 5th.

4. Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits. We will issue a response once we see the compliant. Haven’t seen it yet. Media gets the info before we do.

— CZ Binance (@cz_binance) June 5, 2023

The SEC has charged Binance with 13 counts, including selling unregistered BNB (BNB) and BUSD tokens, Simple Earn and BNB Vault products, and its staking program. Additionally, the SEC alleges that Binance failed to register its platform as an exchange or a broker-dealer clearing agency, and Binance and BAM Trading failed to register Binance.US as an exchange, broker, and clearing agency. CZ has been sued as a “controlling person.”

According to the lawsuit:

“Defendants have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk. […] Defendants have engaged in multiple unregistered offers and sales of crypto asset securities and other investment schemes.”

The lawsuit continued, “Defendants BAM Trading and BAM Management defrauded equity, retail, and institutional investors about purported surveillance and controls over manipulative trading on the Binance.US Platform, which were in fact virtually non-existent.”

Among the allegations behind the charges are claims that Binance failed to restrict U.S. investors from using

SEC chair Gary Gensler stated:

“As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied.”

The SEC is demanding that Binance and CZ be permanently enjoined from further activities, disgorgement of ill-gotten gains with interest and financial penalties.

The lawsuit claimed that tokens traded on the Binance exchange were securities. Those tokens are BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI.