The U.S. Securities and Exchange Commission (SEC) has accused Binance.US, the American arm of the global crypto exchange Binance, of inflating trading volumes through the illegal practice of wash trading, the Wall Street Journal reports.
This practice involves an entity trading with itself to create an illusion of market activity. Despite Binance.US vehemently denying the allegations, the SEC lawsuit and ongoing investigation by the Justice Department have reportedly led to several senior officials' resignations and a significant drop in the platform's market share.
Earlier this month, has reportedly laid off a portion of its staff, about 50 positions, approximately a week following lawsuits from the SEC against the company. The company is preparing for a very costly litigation process.
Court documents reveal that the SEC has been investigating Binance.US since 2020, highlighting evidence of hundreds of millions of dollars in profits from the cryptocurrency exchange.
The regulator recently filed a lawsuit against Binance's U.S. and global entities and their CEO, Changpeng Zhao, alleging the operation of unregistered securities exchanges.
As reported by U.Today, following a lawsuit from the U.S. Securities and Exchange Commission, Binance.US's market share has reportedly declined to less than 1%, with customers being asked to withdraw their funds.
Meanwhile, despite regulatory challenges, the parent exchange, Binance, maintains a significant portion of the global market share at 52%, down from 60% at the start of the year.