Binance Used FTX-Like Web Of Firms To Dodge Regulations, US SEC Lawsuit Reveals
The US Securities and Exchange Commission has made some serious allegations against Binance empire and its founder Changpeng Zhao. US SEC cited Binance CCO admitting that they are operating as an unlicensed securities exchange in the USA.
The main allegation by SEC against Binance and CZ is that they knowingly operated as an illegal, unregistered US Securities business, evading investor and market protections laws.
US SEC chief Gary Gensler tweeted that Zhao and Binance entities allegedly engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.
“A web of deceptions”
US SEC alleged in its lawsuit that as a part of a plan to evade US regulatory oversight over Zhao, Binance, Binance.com platform, Zhao and Binance created BAM Management and BAM Trading in the United States and claimed publicly that these entities independently controlled the operations of the Binance.US platform. But CZ and Binance were controlling BAM Trading’s US business operations and maintaining the crypto asset services of the Binance.US platform.
The lawsuit further says BAM Trading employees referred to Zhao’s and Binance’s control of BAM Trading’s operations as “shackles.” In 2020, BAM Trading’s then-CEO told Binance CFO that her “entire team feels like it had been duped into being a puppet.” CZ directly owns 81% of BAM US.
Another Zhao’s firm that the SEC highlighted in its lawsuit is Merit Peak Limited, a crypto asset trading firm incorporated in the British Virgin Islands. Zhao is Merit Peak’s beneficial owner and several Binance employees conducted its operations. It has described itself as “a proprietary firm trading with our owner’s [Zhao’s] self-made wealth from the digital asset business.”
The lawsuit claims Zhao directed over $16 million to BAM Management to fund the Binance.US Platform’s operations through Merit Peak.
Eerily similar to FTX?
As the US SEC sheds a light on Binance empire’s operations, the scenes behind the covers.look a lot like what transpired at now defunct FTX exchange. Like Sam Bankman-Fried operated Alameda research as a prop trading and market-making entity, CZ controlled BAM Management, Sigma Chain, and Merit Peak. BAM Management US Holdings Inc, which is different from BAM Holdings Limited, was capitalized in part by US investors. With all the allegations coming to light, Binance seems to be in serious trouble. If charges are proved, Binance will be subjected to sanctions and heavy penalties that will leave CZ’s empire crumbling.
Read More: US SEC Sues Coinbase Exchange Following Binance Lawsuit
- 99.3% of Bitcoin Supply in Profit, Analyst Warns of Short-Term Correction
- Pro-Crypto Mike Selig Emerges As CFTC Chair Frontrunner, Gains Ripple CLO’s Endorsement
- ‘Every Crypto ETF You Can Imagine’: Expert Predicts Flurry of Filings After REX-Osprey’s 21 Applications
- Robinhood Lists Strategy’s Bitcoin-Backed Stocks, Boosting Saylor’s BTC Credit Model
- Bitcoin ETFs See 2025 Record Weekly Inflows of $3.2B as BTC Eyes New ATH
- FLOKI Price Prediction as ETP Listing Drives Adoption—Is a 160% Rally Ahead?
- BNB Coin Price Hits ATH as Derivatives Activity Soars—Is $1,520 the Next Stop?
- Aster Price Eyes $3 After Channel Breakout as Open Interest Surges to $1.37B
- Will XRP Price Hit $5 if the SEC Approves ETFs This Month?
- Bitcoin Price Hits $120K Ahead of Q4 — Can Citigroup’s Forecast Hold Up?
- Pi Network Price at Risk of Another Crash as Mysterious Whale Stops Buying
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
