![]() The SEC states that BAM Trading was wholly owned by BAM Management, which in turn was 81% owned by Changpeng Zhao. Subsequent to the issuance of this recommendation, BAM Trading, an allegedly independent firm dedicated to offering Binance.US services, was born. Among them was to create a subsidiary in the United States and disassociate it from Binance by disguising the relationship as one of merely providing technology services. ![]() This legal risk consultancy advised the company on several ways to circumvent the regulation. The platform allegedly encouraged the use of VPNs (networks that allow users to hide the identity of the browser, allowing them to falsely change their connection’s geographical location), and produced a document with instructions on how to retain these VIP customers from the U.S.Īt the same time, Binance contacted a company called Binance Consulting. At least, that’s what the regulators said, and that is what Binance itself claimed, while, as the SEC has set out in the extensive documentation accompanying the lawsuit, it offered its customers ways to bypass the limitation. In 2019, precisely the same year to which the internal documents refer, Binance ceased to be available to U.S. whales: big-spending customers who were not only profitable for the platform, but crucial to trading liquidity, which, in turn encouraged more users to trade. That same year, the company had more than 3,500 U.S. ![]() According to internal company documents cited by the SEC, as of August 2019, Binance had 1.47 million users in the U.S. By advertising its blogs, its website and social networks, with the premise of offering the opportunity to buy and sell hundreds of cryptoassets, it was making a niche for itself. The SEC estimates that between June 2018 and July 2021, Binance would have had profits of $11.6 billion, most of it coming from transaction fees.įounded in China in 2017 by Changpeng Zhao, Binance scaled to become a titan within the crypto universe. laws, including marketplace law, and that those systematic violations put their business at existential risk,” the document reads. “Zhao and Binance fully understood that they were violating numerous U.S. In essence, what the SEC alleges about Binance is that the platform knew full well what rules were to be followed and, instead of trying to comply with them, proceeded to bypass them in a deliberate and premeditated way, thus harming investors. The SEC notes that billions from investors would have ended up in an account owned by Merit Peak, a company ultimately controlled by Changpen Zhao, CEO and founder of Binance. federal laws by operating underhand schemes, falsifying accounts, and the outright deceit of investors. The SEC’s investigation has demonstrated that these platforms believed they could act above the law, to the point that Binance’s head of compliance admitted to another compliance officer at the firm in December 2018 that they were “operating as a fucking unlicensed broker in the United States, bro.” The internal communication has been included in the SEC’s indictment documentation.Īmong the crimes that this real whale of the cryptocurrency world is alleged to have committed, according to the SEC, are: commingling and diverting customer funds, simulating fictitious market operations, circumventing U.S. On Tuesday, before the SEC also sued Coinbase (the world’s second-largest cryptocurrency trader, and the leading listed platform), the regulator filed 13 charges against Binance, a platform that in 2021 traded $9.58 billion, according to data from the U.S. ![]() market regulator, hit the nail on the head when it declared that, in spite of appearances, what the crypto universe lacks is its own law, distinct from international law. This Monday, the Securities Exchange Commission (SEC), the U.S. It has its own jargon, its own humor and a particular way of understanding investment, which has created a whole community around those assets. The world of cryptocurrencies is almost a million miles away from ours.
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