The U.S. Securities and Exchange Commission has added an additional document to the lawsuit that it recently filed against the Binance cryptocurrency exchange. In this recent addition, the Commission accuses Binance and its CEO of putting client funds at risk.
In the new filing, the SEC claims that the defendants, which in this case include Binance, CEO Changpeng Zhao, and BAM Management, “have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.”
The newly added document also accuses the defendants of purposefully working to bypass regulatory oversight by the Commission while offering services related to securities to its customers in the United States.
“[This] puts the safety of billions of dollars of U.S. investor capital at risk and at Binance’s and Zhao’s mercy.”
CNBC is reporting that the penalty amount cited by the Securities and Exchange Commission may be as much as $2.2 billion.
The legal filing provides a specific example of billions of dollars in customer deposits being “commingled” in an account that was controlled by Merit Peak Limited, which according to the SEC is an entity that was controlled by Changpeng Zhao.
The filing added that funds were eventually transferred over to a third party and that this was done “apparently in connection” with the acquisition and sale of virtual assets.
According to U.S. regulators, as it stands, the arrangement provides Zhao with “free reign” over billions of dollars worth of deposits, “with no oversight or controls to ensure that the assets are properly secured.”
At this time, the U.S. arm of Binance has announced that user funds held on the platform “remain safe” despite the efforts on the part of the Securities and Exchange Commission to freeze company assets.
Yesterday, United States regulators petitioned the court for a restraining order against Binance, citing the mishandling of user funds and the illegal operation of an exchange containing unregistered securities. The motion did also request that assets be frozen.
In the recently filed lawsuits against the Binance and Coinbase exchanges, the Securities and Exchange Commission deemed no fewer than 67 different cryptocurrencies valued at over $100 billion to be securities under United States law.