SEC Charges Binance With Multiple Securities Law Violations
Today, the SEC released a press release stating that it had charged Binance and Binance founder CZ with a variety of securities law violations.
The Deets
- The SEC charged Binance and CZ with 13 counts of securities law violations.
- Binance allegedly operated an unlicensed stock exchange, among other issues.
- This adds to a suit already filed by the CFTC back in March.
- The SEC is also classifying SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI as "Crypto Asset Securities".
The Bulk
The Securities and Exchange Commission charged Binance Holdings Ltd. (“Binance”), Binance.com; U.S.-based affiliate, BAM Trading Services Inc. (“BAM Trading”), which, together with Binance, operates the crypto asset trading platform Binance.US; and their founder, Changpeng Zhao ("CZ"), with 13 counts of securities law violations.
The accusations included misleading investors regarding the adequacy of its procedures for detecting and controlling manipulative trading, as well as deceiving investors about its efforts to prevent US investors from trading on its unregulated platform.
Further, the Complaint alleges that the defendants concealed the fact that Binance was commingling billions of dollars of investor assets and sending them to a third party, Merit Peak Limited, that is also owned by Zhao.
Beyond BNB and BUSD, the SEC has also classified Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and COTI as securities.
🎤 Founder Feedback
CZ tweeted that Binance hadn't received or seen the complaint yet...
4.
— CZ 🔶 Binance (@cz_binance) June 5, 2023
Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits.
We will issue a response once we see the complaint. Haven't seen it yet. Media gets the info before we do.
🙏
❗ Why It Matters
Binance is the largest crypto asset trading platform in the world, and it's been under increasing regulatory pressure in the past few months, along with competitor Coinbase. It's yet another dark day for the crypto space, which has been under a consistent storm cloud since the FTX/SBF debacle back in November.
And while BTC and ETH were conspicuously absent from being labeled as securities (although they are both down about -5% each on the day in the wake of the news), several others like SOL and MATIC, metaverse coins like SAND and MANA, and gaming-related tokens like AXS were put in the crosshairs.
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