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 the table of links with all parts.
Case Number: 1:23-cv-01599
Plaintiff: SEC
Defendant: Binance
Filing Date: June 5, 2023
Location: US District Court for the District of Columbia
TABLE OF CONTENTS
SUMMARY
VIOLATIONS
NATURE OF THE PROCEEDING AND RELIEF SOUGHT
JURISDICTION AND VENUE
DEFENDANTS
CERTAIN OTHER ENTITIES
BACKGROUND
I. STATUTORY AND LEGAL FRAMEWORK
A.The Securities Act’s Registration and Disclosure Requirements
B. The Exchange Act’s Registration and Other Requirements
C. Registration of Exchanges, Broker-Dealers, and Clearing Agencies Is Essential to the Proper Functioning of the U.S. Securities Markets and to the Protection of Investors
II. BACKGROUND ON CRYPTO ASSETS AND CRYPTO TRADING PLATFORMS
A.Crypto Assets
B. Consensus Mechanisms and Validation of Transactions on a Blockchain
C. The Offer and Sale of Crypto Assets
D. Crypto Asset Trading Platforms
E. The DAO Report
FACTS
III. UNDER ZHAO’S CONTROL, BINANCE PROVIDED EXCHANGE, BROKER-DEALER, 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.
B. Binance Holds and Controls Customers’ Funds and Crypto Assets.
C. Binance Clears and Settles Customers’ Trades.
D. Binance’s Receives Compensation.
E. Zhao and Binance Actively Solicited Investors in the United States to Trade Crypto Assets on the Binance.com Platform
IV. ZHAO AND BINANCE ESTABLISHED THE BINANCE.US PLATFORM WHILE MAINTAINING SUBSTANTIAL INVOLVEMENT AND CONTROL OF ITS OPERATIONS
A. Zhao and Binance Created U.S. Entities BAM Management and BAM Trading and Developed the Binance.US Platform.
B. Binance Announced the Launch of the Binance.US Platform.
C. Zhao and Binance Exerted Substantial Control Over and Were Integral Participants in the Operations of the Binance.US Platform and BAM Trading.
D. Zhao Rejected BAM CEO A’s and BAM CEO B’s Efforts to Give BAM Trading “Independence” from Zhao and Binance
V. UNDER ZHAO’S CONTROL, BAM TRADING AND BINANCE PROVIDE EXCHANGE AND CLEARING AGENCY FUNCTIONS TO U.S. CUSTOMERS, AND BAM TRADING ALSO PROVIDES BROKERAGE SERVICES TO U.S. CUSTOMERS
A. BAM Trading and Binance, Under Zhao’s Control, Solicit Investors.
B. BAM Trading and Binance Together, Under Zhao’s Control, Maintain and Provide a Marketplace and Facilities for Trading Crypto Asset Securities
C. BAM Trading and Binance, Under Zhao’s Control, Hold and Control Customers’ Funds and Crypto Assets
D. BAM Trading Receives Compensation.
VI. BAM TRADING AND BAM MANAGEMENT ENGAGED IN ACTS AND PRACTICES THAT OPERATED AS A FRAUD AND DECEIT UPON, AND MADE FALSE AND MISLEADING STATEMENTS TO, INVESTORS
A. BAM Trading and BAM Management Touted Their Prohibition of Manipulative Trading on the Binance.US Platform to Investors
B. BAM Trading and BAM Management Misleadingly Touted the Trading Volume of the Binance.US Platform and of Various Crypto Asset Securities to Investors
C. BAM Trading’s and BAM Management’s Statements Were Materially False and Misleading, and BAM Trading and BAM Management Engaged in Acts and Practices That Operated as a Fraud and Deceit Upon Purchasers.
D. Sigma Chain’s Wash Trading on the Binance.US Platform Further Demonstrated the Falsity of BAM Trading and BAM Management’s Statements
E. BAM Trading’s and BAM Management’s False and Misleading Statements and Deceptive Acts and Practices Were Material.
VII. BINANCE AND BAM TRADING ENGAGED IN UNREGISTERED OFFERS AND SALES OF SECURITIES
A. Binance Offered and Sold BNB as a Security
B. Binance Offered and Sold BUSD as a Security.
C. Binance Offered and Sold Its BNB Vault and Simple Earn Programs as Securities
D. BAM Trading Offered and Sold Its Staking Program as a Security.
VIII. THE CRYPTO ASSETS TRADED ON THE BINANCE.COM PLATFORM AND BINANCE.US PLATFORM INCLUDE ASSETS THAT WERE OFFERED AND SOLD AS SECURITIES.
A. SOL
B. ADA
C. MATIC
D. FIL
E. ATOM
F. SAND
G. MANA
H. ALGO
I. AXS
J. COTI
IX. BINANCE AND BAM TRADING WERE REQUIRED TO BUT DID NOT REGISTER AS AN EXCHANGE, BROKER-DEALER, OR CLEARING AGENCY.
FIRST CLAIM FOR RELIEF
SECOND CLAIM FOR RELIEF
THIRD CLAIM FOR RELIEF
FOURTH CLAIM FOR RELIEF
FIFTH CLAIM FOR RELIEF
SIXTH CLAIM FOR RELIEF
SEVENTH CLAIM FOR RELIEF
EIGHTH CLAIM FOR RELIEF
NINTH CLAIM FOR RELIEF
TENTH CLAIM FOR RELIEF
ELEVENTH CLAIM FOR RELIEF
TWELFTH CLAIM FOR RELIEF
THIRTEENTH CLAIM FOR RELIEF
PRAYER FOR RELIEF
DEMAND FOR JURY TRIAL
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