In a major legal development, the Securities and Exchange Commission (SEC) has sued Binance, one of the world’s largest cryptocurrency exchanges, and its CEO Changpeng Zhao. The lawsuit alleges that Binance violated U.S. securities laws and regulations and that Zhao directed those violations. The charges specify that Binance did not register as a securities exchange and that it allowed U.S. investors to trade cryptocurrency derivatives. Additionally, the SEC alleges that Binance mishandled customer funds and gave misleading information to regulators.

The lawsuit has ripple effects for the wider cryptocurrency industry, with many wondering whether other exchanges will face similar legal action. There are concerns that the SEC’s actions against Binance, which is based in Malta but has an office in the United States, could lead to further regulatory scrutiny of crypto trading.

The news has caused market volatility, with Bitcoin and other cryptocurrencies dipping in value. There are also fears that the lawsuit could harm the reputation of the cryptocurrency industry as a whole, which is already facing criticisms around issues of transparency and security.

Binance has not yet issued a statement, but CEO Zhao has previously stated that the company takes compliance seriously and that it intends to work with regulators to address any concerns. It is unclear at this stage how the lawsuit will play out, but it is likely to have significant ramifications for the cryptocurrency industry in the United States and beyond.