Federal regulators have sued Binance, the world’s largest crypto exchange, accusing the company of running an illegal exchange in the United States and commingling billions of dollars’ worth of customer funds. The Securities and Exchange Commission, Wall Street’s primary regulator, alleges the company acted in “blatant disregard” of US securities laws. It also named Binance’s CEO Changpeng Zhao, known as CZ, as a defendant. “Through 13 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,” said SEC Chair Gary Gensler in a statement Monday. The SEC also alleges that Zhao and Binance commingled customer assets and even diverted some to an entity controlled by Zhao. The complaint further alleges that Zhao and Binance knew they were violating US laws. “Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, ‘we are operating as a fking unlicensed securities exchange in the USA bro,’ ” the complaint reads, referring to the company’s chief compliance officer. A spokesperson for Binance said the company takes the SEC’s allegations seriously, but it believes the agency’s accusations are “unjustified.” “We respectfully disagree with the SEC’s allegations that Binance operated as an unregistered securities exchange or illegally offered and sold securities,” the company said in a statement. “Because of our size and global name recognition, Binance has found itself an easy target caught in the middle of a US regulatory tug-of-war.” Bitcoin, the world’s most popular crypto asset and a bellwether for the broader digital asset industry, fell 6% Monday to $25,615. ‘Standing by’ In a tweet Monday, Zhao said his team was “standing by, ensuring systems are stable, including withdrawals, and deposits.” He also tweeted the number 4, his own shorthand for “Ignore FUD, fake news, attacks, etc.” (FUD stands for “fear, uncertainty, doubt” in crypto circles.) Binance has long argued that it isn’t subject to US laws because it doesn’t have a physical headquarters in America. Zhao claims that the company’s headquarters are wherever he is at any point in time, “reflecting a deliberate approach to attempt to avoid regulation,” according to the CFTC’s complaint. Gensler alleged that Zhao and Binance misled investors about risk controls, and that they “attempted to evade US securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value U.S. customers on their platforms.” The SEC suit follows a complaint earlier this year from the Commodity Futures Trading Commission. That agency accused Binance and Zhao of violating US derivatives trading laws in multiple ways, including allegedly secretly coaching “VIP” customers within the United States on how to evade compliance controls. Binance makes money primarily from collecting fees on crypto trades. Zhao started the company in China in 2017, and later relocated to avoid a Chinese government crackdown on digital assets. US regulators have been intensifying their scrutiny of crypto platforms since the collapse of FTX, the exchange founded by Sam Bankman-Fried, in November last year. Before it filed for bankruptcy, FTX briefly sought a lifeline through its much-larger rival, Binance, but the deal was quickly called off, with Binance saying that FTX’s problems were “beyond our control or ability to help.” FTX is now at the center of what federal prosecutors have called one of the biggest financial frauds in US history. Bankman-Fried has pleaded not guilty to multiple counts of fraud and conspiracy and is awaiting trial. Several of his former business partners have pleaded guilty and are cooperating with authorities.