SEC v. Binance Court Filing, retrieved on June 5, 2023 is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This is part 17 of 69.
FACTS
III. UNDER ZHAO’S CONTROL, BINANCE PROVIDED EXCHANGE, BROKERDEALER, AND CLEARING AGENCY SERVICES TO U.S. INVESTORS THROUGH THE BINANCE.COM PLATFORM.
A. The Binance.com Platform Provides a Marketplace and Facilities for Trading Crypto Asset Securities.
i. Display and Order Book
87. Customers can access and create accounts on the Binance.com Platform via the Binance.com website, a Binance mobile phone application, or a Binance-created application programming interface (“API”).
88. The Binance.com Platform displays customer account information, including account balances, and open orders, order history, and trade history with respect to crypto assets available on the platform. The platform also displays open crypto asset orders on the order book and provides real-time data of bid and ask prices, trading volume, and the times that the orders were submitted. Additionally, the Binance.com Platform displays information about executed trades (i.e., price, quantity, and time historical data for such trades).
ii. Order Matching and Trading Rules
89. The Binance.com Platform offers “spot” (immediate) market trading through an order-matching functionality similar to that of a traditional securities exchange.
90. According to Binance, when an investor places an order on the Binance.com Platform, the order enters Binance’s internal automated matching engine, called “MatchBox,” which matches buy-and-sell orders based on programmed, non-discretionary rules that govern how orders will interact. When separate customers’ buy and sell orders have prices that overlap, MatchBox executes the trade and removes the orders from the order book. Orders that do not execute immediately are typically ranked and displayed in price-time priority, meaning that orders placed earlier in time are prioritized for any given price.
91. MatchBox does not indicate to one party the identity of the other party to a trade. Upon execution of a trade, other functionality in the Binance.com Platform settles the trade.
iii. Binance OTC
92. Since at least January 2019, Binance has operated additional functionality that it refers to as “Binance OTC.” As advertised and described by Binance, Binance OTC allows customers to transact directly with Binance, where Binance is the counterparty trading in its own account. Binance quotes prices directly to Binance OTC customers, acts as the principal on each trade, and profits from the spread between their bid and ask quotations.
93. In marketing Binance OTC, Binance has touted “a number of advantages to trading with us,” including “Fast Settlement” and a “Simple Process - The trading discussion happens on chat, and a trade can be confirmed in as quickly as 1-2 minutes from the time you reach out to us for a price. Once we agree on a price, we fully take care of the settlement process by moving the coins you’re selling out of your Binance account and the coins you’re buying in … you don’t need to send coins anywhere.”
94. Since the launch of the Binance.com Platform, Binance provided OTC trading services through Merit Peak—a Zhou-owned entity—serving as the counterparty to customers on the Binance.com Platform, and Merit Peak also provided market making services on the Binance.US Platform.
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This court case 1:23-cv-01599 retrieved on September 6, 2023, from docdroid.net is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction.
