The United States Securities and Exchange Commission (SEC) has taken further action in its ongoing lawsuit against Binance.US, raising concerns about the safety of investors’ funds.
In a filing submitted on June 5, the SEC alleges that the defendants, including Binance CEO Changpeng Zhao and Binance Holdings Ltd., have “enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.”
The SEC claims that the defendants deliberately sought to circumvent U.S. regulatory oversight while providing securities-related services to U.S. users, thereby jeopardizing billions of dollars of U.S. investor capital. CNBC reports that the SEC’s estimation of the amount at risk goes as high as $2.2 billion.
One example cited in the filing involves the commingling of billions of dollars of customer funds from both Binance platforms in an account operated by a “Zhao-controlled entity” known as Merit Peak Limited.
The funds were subsequently transferred to a third party, presumably in connection with the purchase and sale of cryptocurrency assets.
According to regulators, this arrangement has granted Zhao unchecked control over billions of deposited assets on the Binance.US platform, without any oversight or safeguards in place to ensure their proper security.
As of now, Binance.US has assured users that their funds on the platform remain safe, despite the SEC’s attempts to freeze assets as part of their legal action.
On June 6, the SEC filed a motion for a restraining order against Binance, citing the mishandling of user funds and the operation of unregistered securities. The freezing of assets is among the requested actions outlined in the motion.
