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The SEC said that Binance and Zhao misused customers’ funds and diverted them to a trading entity that Zhao controlled. That trading firm, Sigma Chain, engaged in manipulative trading that made Binance’s volume appear larger than it actually was, the SEC said. Binance also concealed that it commingled billions of dollars in customer assets and sent them to a third-party, Merit Peak, which was owned by Zhao, the SEC alleged.
“This will be a landmark case,” said Kurt Gottschall, a partner at Haynes and Boone and former head of the SEC’s Denver office. “The SEC appears to be very concerned about the commingling of customer funds.”
https://www.wsj.com/articles/sec-sues-crypto-exchange-binance-over-u-s-rule-violations-6918ed0f
