S.E.C. Accuses Binance of Mishandling Funds and Lying to Regulators

The Securities and Exchange Commission has accused Binance, the world’s largest cryptocurrency exchange, of mishandling customer funds as well as lying to regulators and investors about its operations in a sweeping case filed in federal court on Monday.

The Wall Street regulator said Binance had been mixing “billions of dollars” in customer funds and secretly sending them to a separate company controlled by Binance’s founder, Changpeng Zhao.

The charges included misleading investors about the adequacy of its systems to detect and control manipulative trading. Regulators also said Binance did not take sufficient steps to restrict U.S. investors from accessing Binance’s unregulated exchange.

“We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk,” said Gurbir S. Grewal, director of the S.E.C.’s enforcement division.

The nation’s top securities regulator filed 13 charges against Binance and Mr. Zhao, better known in the crypto world as “C.Z.” The S.E.C. is taking action a little over a month after the Commodities Futures Trading Commission filed its own civil enforcement action against Binance and Mr. Zhao.

The moves against Binance and Mr. Zhao come months after the filing of criminal charges against Sam Bankman-Fried, the founder of FTX, which had been a big rival to Binance in the crypto trading world until FTX imploded and filed for bankruptcy last November.

This is a breaking story. Check back for updates.