The United States Securities and Exchange Commission (SEC) has filed another document in its lawsuit against Binance.US, claiming investors’ funds are at risk.
In the filing entered on June 5, the regulators claim that the defendants, including Binance CEO Changpeng “CZ” Zhao, BAM Management, BAM Trading and Binance, “have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.”
It goes on to say that the defendants’ made “purposeful efforts” to bypass U.S. regulatory oversight while providing securities-related services to U.S. users.
“[This] puts the safety of billions of dollars of U.S. investor capital at risk and at Binance’s and Zhao’s mercy.”
A report from CNBC claims that the amount cited by the SEC goes as high as $2.2 billion.
The filing offers an example of billions of U.S. dollars of customer funds from both Binance and Binance.US being “commingled” in an account operated by a “Zhao controlled entity,” which it identified as Merit Peak Limited.
It said funds were then transferred to a third party “apparently in connection” with the purchase and sale of crypto assets.
Related: SEC’s Gensler claims ‘parallels’ between Binance and FTX, yet one wasn’t sued
According to regulators, the arrangement has given and continues to provide Zhao “free reign” over billions in deposited assets on the Binance.US platform, “with no oversight or controls to ensure that the assets are properly secured.”
At the time of writing, Binance.US has said that user funds on the platform “remain safe” amid the SEC’s attempts to freeze assets.
On June 6, the U.S. regulators filed a motion for a restraining order against Binance due to mishandling user funds and operating with unregistered securities. The freezing of assets was one of the requested actions included in the motion.
In its lawsuits against Binance and Coinbase, the regulator labeled at least 67 different cryptocurrencies as securities. This affects more than $100 billion worth of tokens in the market.
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