What is happening with Binance? Bitcoin reels as crypto exchange faces lawsuit from US regulators

euronews.com:

The world's largest cryptocurrency exchange Binance and its founder Changpeng Zhao have been accused of misusing investor funds, operating as an unregistered exchange, and violating a slew of US securities laws in a lawsuit filed by US regulators.

Filed in a federal court in Washington DC, the US Securities and Exchange Commission (SEC) lawsuit on Monday lists 13 charges against the firm - including commingling and divert customer assets to an entity Zhao owned called Sigma Chain.

The news caused Bitcoin, the largest crypto in terms of value in circulation - worth over $500 billion (€468 billion) - to plummet, losing almost 2 per cent in a matter of minutes.

Binance is a Cayman Islands limited liability company founded by Zhao and the charges are familiar to practices uncovered after the collapse of the second largest cryptocurrency exchange, FTX, last year.

The lawsuit lays out the extent to which the firm's owners knew of the alleged legal violations, stating "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'".

SEC Chair Gary Gensler in a written statement that Zhao and Binance "engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law".

"The public should beware of investing any of their hard-earned assets with or on these unlawful platforms," Gensler said.

In a social media post, Binance said that it has been cooperating with the SEC's investigation but said that the agency "chose to act unilaterally and litigate".

"While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency