Binance is being sued by a number of regulatory agencies and individuals for a variety of reasons, including:
- Operating an unregistered securities exchange: The Securities and Exchange Commission (SEC) sued Binance in June 2023 for operating an unregistered securities exchange. The SEC alleged that Binance allowed US residents to trade unregistered securities, including tokens that were offered through initial coin offerings (ICOs).
- Market manipulation: The Commodity Futures Trading Commission (CFTC) also sued Binance in June 2023 for market manipulation. The CFTC alleged that Binance engaged in wash trading and spoofing, which are illegal trading practices that can artificially inflate or deflate the price of a security.
- Money laundering: The Financial Action Task Force (FATF) has also warned Binance about its AML and KYC (anti-money laundering and know-your-customer) practices. The FATF is an international body that sets standards for combating money laundering and terrorist financing.
- Customer protection: Binance has also been criticized for its customer protection practices. In particular, Binance has been accused of not doing enough to protect its users from fraud and theft.
Binance has denied all of the allegations against it and has said that it is committed to complying with all applicable laws and regulations. The lawsuits are still ongoing and it is unclear how they will be resolved.
In addition to the lawsuits, Binance has also been fined by a number of regulatory agencies. In 2021, Binance was fined $900,000 by the Financial Conduct Authority (FCA) in the United Kingdom for operating without a license. Binance was also fined $18.5 million by the Japan Financial Services Agency (FSA) for violating AML and KYC regulations.
The regulatory scrutiny of Binance is likely to continue as governments around the world try to figure out how to regulate the cryptocurrency industry. Binance is one of the largest cryptocurrency exchanges in the world and it is important for regulators to understand how it operates and whether it is complying with the law.