Key Takeaways:

• Binance has expressed disappointment with the SEC’s lawsuit and allegations, stating that they have been in good-faith discussions to reach a settlement
• The company refutes the SEC’s allegations, assuring that user assets are safe and secure
• The SEC’s lawsuit alleges that Binance and BAM Trading have unlawfully offered three essential securities market functions without registering with the SEC

Binance, the world’s largest cryptocurrency exchange, has responded to the lawsuit filed by the U.S. Securities and Exchange Commission (SEC). The company has expressed disappointment with the SEC’s allegations, which include mishandling of funds, operating as an unregistered exchange, and selling unregistered securities. The lawsuit names Binance, its CEO Changpeng Zhao, Binance.US, and BAM Trading as defendants.

In a statement, Binance said, “Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations. But despite our efforts, with its complaint today the SEC abandoned that process and instead chose to act unilaterally and litigate. We are disheartened by that choice.”

Binance.US also responded to the lawsuit via a tweet, stating that the filing is unjustified by the facts, the law, or the Commission’s own precedent. The company also refuted the SEC’s allegations that Binance.US commingled user funds, assuring that user assets are safe and secure.

The SEC’s lawsuit alleges that Binance and BAM Trading, under Zhao’s leadership and control, have unlawfully offered three essential securities market functions—exchange, broker-dealer, and clearing agency—on the Binance Platforms without registering with the SEC. The lawsuit also claims that billions of U.S. dollars of customer funds from both Binance Platforms were commingled in an account held by a Zhao-controlled entity, Merit Peak Limited, and were subsequently transferred to a third party apparently in connection with the purchase and sale of crypto assets.