US sues Binance and founder Zhao: Keyponts and 21 Penaties

SEC Files 13 Charges Against Binance Entities and Founder Changpeng Zhao $Coinbase Global, Inc.(COIN)$ $VanEck Bitcoin Strategy ETF(XBTF)$ $ProShares Short Bitcoin Strategy ETF(BITI)$ $ProShares Bitcoin Strategy ETF(BITO)$

Charges include operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities.

After news, Bitcoin fell by more than $1,500 in the short term, falling below the $26,000 mark, a drop of more than 5%. Binance Coin also refreshed its daily low.

Full link of the SEC Complaint：

1. Defendants

The defendant is not only Zhao himself, but also directly or indirectly related companies.

The SEC charged defendants Biance Holdings Limited (Biance), BAM Trading Services Inc (BAM Trading), BAM Management US Holdings Inc (BAM Management), and Zhao with violating the federal securities laws by offering U.S. investors trading in cryptoasset securities without registration platforms and other investment opportunities, while deceiving investors about futures trading monitoring and control.

2. The SGC charged defendants with three major offenses:

• Binance and BAM Trading, under the leadership and control of Zhao, provided the functions of an exchange, broker, dealer, and clearing institution on the Binance.com and Biance.US platforms without registration.

• Binance and BAM Trading have provided the issuance and sale of encrypted asset securities on two platforms without registration, including Binance’s own encrypted assets BNB and BUSD, as well as Binance’s benefit plans BNB Vault and Simple Earn, as well as on the Binance.US platform The so-called "mortgage" investment scheme offered on the Internet.

• BAM Trading and BAM Management made false representations to investors that monitoring and controls to prevent manipulative trading were in place on the Binance.US platform when in reality these monitoring and controls were virtually non-existent.

The organizational chart of CZ and Binance:

3. SEC asks court to issue the following penalties

(Punishment category)

(1) Defendant is prohibited from continuing to engage in the violations described in this action

(2) Order the defendant to return to the U.S. investor all illegally obtained profits, with interest

(3) Order the defendant to pay a civil penalty

(Investigation category)

(4) order the defendant to provide all relevant records to the SEC and to submit to the SEC's supervision

(5) order the defendant to stop providing crypto asset services in the United States

(6) Order the defendant to provide the SEC with all evidence relevant to this action and to cooperate with the SEC investigation

(7) Order defendants to provide the SEC with all witnesses relevant to this proceeding and to arrange for them to be questioned by the SEC

(8) order the defendant to provide the SEC with all documents related to this proceeding, and to permit the SEC to copy and inspect them

(9) order defendants to provide the SEC with all financial information relevant to this action and to allow the SEC to audit and verify them

(10) order the defendants to provide the SEC with all relevant cryptographic asset information related to this action, and to allow the SEC to track and freeze them

(11) Order the defendants to provide the SEC with all communications related to this proceeding and to permit the SEC to monitor and intercept them

(12) Order the defendants to provide the SEC with all identifying information relevant to this action, and to allow the SEC to confirm and verify them

(13) Order the defendants to provide the SEC with all other information relevant to this proceeding, and to permit the SEC to request and obtain them

(Prohibited)

(14) Zhao is prohibited from serving as a director, senior executive or other similar position of any company or entity that publicly issues securities or is registered or filed in the United States

(15) Zhao is prohibited from participating in any encrypted asset transaction, issuance, sale, purchase, holding or transfer

(16) Zhao is prohibited from participating in any securities transaction, issuance, sale, purchase, holding or transfer

(17) Zhao is prohibited from participating in any financial activities or services conducted in the United States

(18) Prohibit Zhao from entering or staying in the United States

(Authorization class)

(10) Grant the SEC the right to conduct further investigation and evidence collection against the defendant

(20) Grant the SEC the power to take interim preservation measures against the defendant

(21) Authorize the SEC to take other necessary and appropriate remedial measures against the defendant

The following is Zhao’s response on Twitter and Binance’s response on official website.

Source：https://www.binance.com/en/blog/ecosystem/sec-complaint-aims-to-unilaterally-define-crypto-market-structure-8707489117122437402

How will this lawsuit influence bitcoin market？