Before we dive in, let’s first get a look at the ‘Who Owns Who’ in this mess:
Here’s the summary of the allegations, which you can also read from the SEC here.
- Defendants have disregarded federal securities laws and enriched themselves at the expense of investors.
- Binance and BAM Trading have unlawfully solicited US investors through unregistered trading platforms.
- In addition, they have engaged in unregistered offers and sales of crypto asset securities and other investment schemes.
- BAM Trading and BAM Management have misrepresented surveillance and control over manipulative trading on the Binance.US Platform.
- Defendants have evaded registration and regulatory oversight designed to protect investors and markets.
- They have commingled and diverted investors’ assets without proper oversight.
- Defendants failed to implement adequate trade surveillance and manipulative trading controls on the Binance.US Platform.
- Sigma Chain engaged in wash trading to artificially inflate trading volumes on the platform.
- Binance and BAM Trading have violated securities laws by conducting unregistered offers and sales, evading registration, and operating with conflicts of interest.
- Their actions have violated the Securities Act of 1933 and the Securities Exchange Act of 1934.
- They have dodged disclosure and other requirements meant to protect capital markets and investors.
And here are a few of the damning facts as alleged by the SEC; as we review this hog of a filing, more will be added.
- Text or e-mail from Binance COO replying to an employee about blocking US customers showed they encourage US users to use a VPN to circumvent blocked access.
- Binance’s COO in 2018 admitted to a Binance compliance officer: “We are operating as a fking unlicensed securities exchange in the USA bro.”
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From the SEC filing – click to enlarge. - There were strong efforts by Binance.US to wrest control and get more independence from CZ and Binance Corporate; the CEO even called it Project 1776, but that CEO was then fired.