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In the complaint, the SEC alleges Zhao and Binance controlled customers’ assets on the platform and commingled or diverted billions of dollars of those assets as they desired, including to Sigma Chain, a European business Zhao owned and controlled.
It further alleges that while Zhao and Binance told U.S. customers they were restricted from transacting on the Binance.com international exchange, they allowed “high-value U.S. customers” to trade on the platform.
U.S. customers instead were told they could transact on what was supposedly the independent trading platform Binance.US, but in fact that exchange was actually controlled by Zhao and Binance, the complaint also alleges.
In a blog, Binance said it is disappointed by the SEC’s decision to file charges and had been cooperating with investigators.
In the news
Of course, this is not the first time Binance and its founder have popped up in the news, having played a role in the collapse of FTX.
FTT prices dropped like a rock amid the controversy and FTX was thrown into disarray as withdrawals mounted.
Binance seemed to emerge as FTX’s knight in shining armor when Zhao tweeted the news his company would acquire FTX, but that deal quickly fell apart.
That led to the complete collapse of FTX and its founder’s, Sam Bankman-Fried, empire.
Finally in December, the SEC filed charges against disgraced FTX founder Bankman-Fried for “orchestrating a scheme to defraud equity investors.”
Binance actually was one of FTX’s first lead investors, taking part in a round of undisclosed value in late 2019, according to Crunchbase data.
Illustration: Dom Guzman
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