On June 5, 2023, the U.S. Securities and Exchange Commission (SEC) filed a complaint and issued a press release announcing that it had “charged Binance Holdings Ltd. (‘Binance’), which operates the largest crypto asset trading platform in the world, Binance.com; U.S.-based affiliate, BAM Trading Services Inc. (‘BAM Trading’), which, together with Binance, operates the crypto asset trading platform, Binance.US; and their founder, Changpeng Zhao, with a variety of securities law violations.”
Among other things, the press release announced that “[t]he Complaint also charges violations of critical registration-related provisions of the federal securities laws:
- Binance and BAM Trading with operating unregistered national securities exchanges, broker-dealers, and clearing agencies;
- Binance and BAM Trading with the unregistered offer and sale of Binance’s own crypto assets, including a so-called exchange token, BNB, a so-called stablecoin, Binance USD (BUSD), certain crypto-lending products, and a staking-as-a-service program; and
- Zhao as a control person for Binance’s and BAM Trading’s operation of unregistered national securities exchanges, broker-dealers, and clearing agencies.”
Then, on July 24, 2023, The Wall Street Journal issued an article entitled “Some Binance.US Crypto Trading Was a Mirage, the SEC Alleges”, which discussed how the SEC has alleged that Binance inflated trading volumes at the direction of Changpeng Zhao in order to artificially raise asset values, a process known as “wash trading”.