After the US SEC filed 13 counts of financial fraud charges against Binance Exchange and its founder, banking affiliate Binance US stopped accepting deposits. The announcement made via Twitter, also came with a notification that customers and investors have up to Tuesday (June 13, 2023) to withdraw their crypto assets and dollar funds. Deposit and withdrawal transactions are being halted, pending approval of the US SEC’s court petition to freeze all Binance US assets in the US.
Overview of SEC’s Financial Fraud Charges vs. Binance Exchange and CEO Zhao
The court petition to freeze more that $2 billion worth of crypto assets and U.S. bank accounts with balances totalling $377 million, is a move to prevent Binance Exchange from transferring the US-held customer assets and funds to offshore financial institutions. Binance.US called the legal petition “unwarranted,” as it purports to be independent from the Binance Exchange (Ethereum) founded by CEO Changpeng Zhao.
However, the SEC had apparently found evidence that Binance CEO Zhao was secretly controlling Binance U.S. and its operations. The 13 fraud charges filed by the SEC were summarized as constituting “a web of lies” that artificially increased trading volumes. Although CEO Zhao denies the charges, the SEC discovered that US Binance funds have been diverted to comingle with the funds of Binance Exchange. The comingling of funds allowed CEO Zhao to invest in the unregistered speculative futures exchange investment products called Futures Exchange (FTX).
However, the SEC had apparently found evidence that Binance CEO Zhao was secretly controlling Binance U.S. and its operations. The 13 fraud charges filed by the SEC were summarized as constituting “a web of lies” that artificially increased trading volumes. Although CEO Zhao denies the charges, the SEC discovered that US Binance funds have been diverted to comingle with the funds of Binance Exchange. The comingling of funds allowed CEO Zhao to invest in the unregistered speculative futures exchange investment products called Futures Exchange (FTX).Unfortunately, the FTX company collapsed in November 2022. It turned out that FTX was just another Ponzi scheme investment rip-off.
