The U.S. Securities and Exchange Commission (SEC), the supervisory authority for securities markets, sued Binance (Binance Holdings Ltd.), its founder Changpeng Zhao, and associate companies: BAM Trading Services and BAM Management US Holdings, for infringements of rules on trading in securities.

The SEC filed 13 charges against the company, including: operating unregistered exchanges, broker-dealers, and clearing agencies, providing misleading information about trade control and supervision on the Binance.US platform, and unregistered offering and sale of securities. According to the SEC, Binance and BAM operated the Binance.US platform, which was created for clients in the U.S. after the main Binance platform announced in 2019 that it was leaving the U.S. market.

The statement of claim alleges that from June 2018 to July 2021 Binance earned at least USD 11.6 billion (GBP 9.3 billion), mostly from transaction fees.

The SEC claims that Zhao and Binance were able to combine or redirect clients’ assets ‘at their own discretion’, also to an entity controlled by Zhao named Sigma Chain. Sigma Chain also allegedly engaged in ‘manipulative trade’, which artificially overestimated the trading volume on Binance.US.

The operations of Binance cause controversy all over the world. Warnings about trading on the crypto exchange have been issued, including by the KNF and the British Financial Conduct Authority.