- The SEC is accusing Binance and CEO Changpeng Zhao of violating securities laws.
- The SEC complaint is a doozy.
The crypto crackdown has come for Binance.
The US Securities and Exchange Commission (SEC) on Monday filed a complaint against the world's largest cryptocurrency exchange. The summary opens:
This case arises from Defendants' blatant disregard of the federal securities laws and the investor and market protections these laws provide. In so doing, Defendants have enriched themselves by billions of U.S. dollars while placing investors' assets at significant risk.
The complaint goes from there, rolling through more than 100-pages full of detail. Binance said early Monday in a blog post that it was disappointed by the lawsuit.
There's lots to pour over in the complaint (I'm hoping Bloomberg columnist Matt Levine is going to write about this one), but I'm just going to point you to this incredible exchange from page 29 of the complaint.
Zhao and Binance understood that they were operating the Binance.com Platform in violation of numerous U.S. laws, including the federal securities laws, and that these ongoing violations presented existential risks to their business.
As Binance's CCO bluntly admitted to another Binance compliance officer in December 2018, "we are operating as a fking unlicensed securities exchange in the USA bro." (Emphasis added.)
Uh-oh! Finance Twitter of course jumped on this. Joe Weisenthal, once of Insider, now of Bloomberg, described it as an "absolutely legendary quote."
You can apparently now buy a T-shirt with that quote printed on the front, thanks to FT Alphaville.
I wouldn't normally recommend reading a SEC document in full, but this is one of those occasions where it's absolutely warranted. Go check it out!