The US Securities and Exchange Commission has raised six crazy accusations against Coin An

The US Securities and Exchange Commission has accused the world's largest cryptocurrency exchange, Binance, in a civil lawsuit filed in a federal court in Washington, D.C., of being an almost undisguised shell game that allows its Svengali style founder to secretly use customer accounts and conduct business in the United States.

The encryption company and its co founder, Zhao Changpeng, stated that this lawsuit represents a widespread violation of the company's long-standing efforts to resolve issues with the organization. It believes that the action of the SEC will only "undermine the position of the United States as the global Financial innovation and leadership center".

The SEC's allegations are broad in scope, but mainly revolve around the efforts of Coin An to create a separate US trading business for US clients, which will be subject to certain restrictions and comply with US regulatory regulations. However, regulatory authorities have stated that continuing to allow US clients to trade on much looser regulated overseas exchanges and avoiding US regulation is all to whitewash their appearance.

The lawsuit also depicts a trillion dollar exchange that operates entirely around the whims of its wandering founder, with the sole purpose of avoiding any form of regulatory scrutiny.

The following are the six craziest accusations made by the SEC against Coin An in the lawsuit:

1. There has never been a regulation

The lawsuit claims that Coin An established trading units BAMtrading and BAMManagementUSHoldings, Inc. that are only located in the United States, To avoid its major exchanges outside the United States being subject to scrutiny by US regulatory agencies. Coin An even hired a separate CEO for its US business. But the US Securities and Exchange Commission stated in the lawsuit that Coin Security never operated these two businesses separately, and CZ secretly instructed the US company while allowing certain high net worth US clients to continue trading on its overseas platforms. The lawsuit also accuses Binance and BAMTrading of engaging in unregistered securities crypto asset issuance. The US Securities and Exchange Commission claims that through this misleading approach, BAM trading and BAM management of US holding companies "operate in a fraudulent or deceptive manner".

According to the SEC's complaint, the Chief Compliance Officer of Coin An bluntly stated, "We are an unlicensed securities exchange in the United States

This is not the only thing that the Chief Compliance Officer of Coin Security said. According to the lawsuit filed by the US Securities and Exchange Commission, in order to evade US securities laws, CZ and Binance designed and implemented a multi-step plan. Binance's Chief Compliance Officer ultimately admitted, 'We never want (Binance). com to be regulated.'

2. Puppet Show

As for who is running Coin's US trading business, the SEC stated that the person hired to operate the business quickly denied the claim that they were truly responsible.

BAMTrading's employees refer to Zhao and Yuan An's control over BAMTrading's operations as' shackles', which often prevents BAMTrading's employees from understanding and freely operating and operating Binance's business. The US platform - to the extent that by November 2020, BAMTrading's then CEO told Yuan An's CFO that her 'entire team feels (it) has been deceived into becoming a puppet,' the lawsuit claims.

3. Utilize customer funds

The US Securities and Exchange Commission argues that due to the lack of any regulatory oversight, CZ is free to take deposits from customers of Coin An, including mixing them and directing them to entities under its control. It is said that he subsequently used this cash - totaling billions of dollars (the company's trading volume in 2021 was $9.58 trillion) - to help manipulate cryptocurrency prices through large-scale bulk purchases.

In the absence of regulation, defendants can freely transfer investors' cryptocurrency and legal assets, sometimes mixing and transferring them in ways that properly registered brokers, traders, exchanges, and clearing houses cannot. For example, through accounts owned and controlled by Zhao and Coin An, billions of dollars of customer funds from the two Coin An platforms are mixed in entities controlled by Zhao (known as MeritPeakLimited) In the accounts held, these funds were subsequently transferred to third parties, clearly related to the purchase and sale of encrypted assets, "the lawsuit stated.

Coin An insisted in a statement that it has never put any client's funds at risk. The US Securities and Exchange Commission has not claimed that any funds are missing.

4. Existence in Name and Existence in Reality

The SEC alleges that the importance of monitoring and controlling its trading platform is only a verbal commitment. Although the company stated that it has mechanisms to prevent manipulation of transactions, it has not implemented these mechanisms and has even violated these control measures.

Zhao himself stated in 2019, 'Reputation is the most important asset of any exchange! If an exchange forges their trading volume, will you entrust your funds to them?' "the lawsuit wrote. The so-called controls actually do not exist, and those that exist do not monitor or prevent 'whitewashing' or self trading, which occurs on the Coin US platform. The most noteworthy thing is that from at least September 2019 to June 2022, the trading company SigmaChainCase owned and controlled by Zhao engaged in false trading, artificially exaggerating the trading volume of encrypted asset securities on the Coin US platform

5. Companies without a home

Coin An refused to disclose its headquarters or where it is located, further promoting its efforts to avoid regulatory scrutiny. Zhao Changpeng himself "refused to disclose the headquarters of Coin An, claiming that 'the place where I am sitting is Coin An's office. Any place I encounter will be Coin An's office,'" the lawsuit stated.

Zhao said, The concept of a formal corporate entity with headquarters and its own bank accounts is unnecessary: "For blockchain companies, all of these things do not need to exist. However, it is worth noting that billions of dollars of funds have flowed from these platforms into the tens of US bank accounts owned by Coin An and Zhao. Coin An and any of its subsidiaries or affiliated entities have not been registered with the US Securities and Exchange Commission in any capacity The lawsuit continues.

6. Earn billions of dollars at once

Considering its trading volume, Coin Security is a very profitable business - very profitable. The lawsuit states that although the fee for each transaction was as low as 0.015 cents, this fee quickly accumulated into billions of dollars.

By 2021, its trading volume has soared to $9.58 trillion, becoming the world's largest crypto asset trading platform. During the period from June 2018 to July 2021, Coin An received at least $11.6 billion in revenue, most of which came from transaction fees, "the lawsuit stated.

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