The Securities and Exchange Commission is officially accusing Binance, the largest cryptocurrency exchange by volume, of breaking US securities rules.

Among the thirteen different charges, the regulator alleges that Binance failed to follow investor protection rules by secretly allowing "high-value US customers to continue trading on the platform," despite publicly claiming that "US customers were restricted from transacting."

The SEC also accuses CEO Changpeng Zhao of secretly running the US subsidiary of Binance, despite advertising it to US customers as a "separate, independent trading platform for US investors."

The news is a major escalation by regulators in their efforts to hold Binance accountable that could set the tone for future conversations surrounding whether cryptos should be regulated as securities in the US.

SEC Chair Gary Gensler, for one, didn't hold back.

"Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law," deception, conflicts of interest, lack of disclosure, and calculated evasion of the law," Gensler said in the statement.

The news sent reverberations throughout the world of crypto. The company's token BNB dipped by 10 percent, and even the stock of rival exchange Coinbase fell by about the same amount. Bitcoin's value dropped by over six percent.

The SEC already had its sights set on Zhao, with the regulator already investigating whether Binance illegally sold coins as part of its virtual currency called BNB on its platform, per Bloomberg.

Now, the regulator is also accusing Binance of failing to implement controls to stop market manipulation, such as monitoring for "wash trading," which is when a trader buys an asset from their own account, artificially inflating its price.

Zhao, for his part, has routinely said that neither he nor Binance did anything wrong — and this latest escalation is no different. In fact, it sounds like he was blindsided by the news.

"Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits," Zhao tweeted in response. "We will issue a response once we see the complaint. Haven't seen it yet. Media gets the info before we do."

But it didn't take long for the exchange's comms team to jump into action.

"We are disappointed that the US Securities and Exchange Commission chose to file a complaint today against Binance seeking, among other remedies, purported emergency relief," Binance wrote in its official statement, adding that "we have actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns."

Binance also said that "any allegations that user assets on the Binance.US platform have ever been at risk are simply wrong," and that it's an "easy target now caught in the middle of a US regulatory tug-of-war."

The company maintains that it is "not a US exchange," and that the SEC will only have a limited reach as a result.

"Still, we stand with digital asset market participants in the US in opposition to the SEC’s latest overreach, and we are prepared to fight it to the full extent of the law," the statement reads.

Reading between the lines, the exchange's growing feud with the regulator is about to become even more bitter — a drawn-out game of finger-pointing that could set the tone for future conversation surrounding crypto regulation.

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