Binance and Zhao allegedly undermined the company's own compliance, courted U.S. investors and traded against its customers using market-making companies.

The US Securities and Exchange Commission on Monday sued Binance and its CEO, Changpeng Zhao. The Wall Street Journal reported that the lawsuit accuses the world's largest cryptocurrency exchange of breaking US securities rules and for operating an illegal exchange.

The U.S. Securities and Exchange Commission sued crypto exchange Binance, the operating company for Binance.US and Binance founder and CEO Changpeng "CZ" Zhao on allegations of violating federal securities laws on Monday.

The SEC’s complaint also alleged that Binance and Zhao secretly control customers’ assets, allowing them to commingle and divert customer funds.

The U.S. Securities and Exchange Commission sued cryptocurrency exchange Binance Holdings and its CEO Changpeng Zhao for allegedly violating U.S

The SEC said that Binance has operated an illegal exchange and engaged in a "web of deception" meant to flaunt US securities rules.

The top U.S. securities regulator sued cryptocurrency platform Coinbase on Tuesday, the second lawsuit in two days against a major crypto exchange, in a dramatic escalation of a crackdown on the industry and one that could dramatically transform a market that has largely operated outside regulation.