The SEC has sued Binance, the biggest crypto exchange in the world in terms of trading volume, in its most recent legal action against the cryptocurrency industry. This brings the total number of cryptocurrencies that the US regulator considers to be securities to 61.
The SEC Has Increased the Number of Crypto Assets It Deems As Securities
The SEC claims that Binance and Zhao deceived investors, operated unregistered exchanges and broker-dealers, and offered and sold unregistered securities, including 10 crypto assets: Binance Coin, Binance USD, Solana, Cardano, Polygon, Cosmos, The Sandbox, Decentraland, Axie Infinity, and Coti.
This is a major milestone for the crypto industry, as the SEC’s designation of a specific token as a security can deter brokers from offering it, affecting its liquidity and price. According to Coinglass’ data, traders lost over $297 million in the last 24 hours. Binance experienced the largest liquidation of funds during this period, nearly $98 million.
A dispute between two regulatory agencies, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), is ongoing over the legal status of most cryptocurrencies. The SEC asserts that they are securities and thus fall under its jurisdiction, while the CFTC claims that they are commodities and thus under its authority.
The SEC Chair Gary Gensler has repeatedly stated that he considers almost all cryptocurrencies securities, except for Bitcoin [BTC], which the CFTC has declared a commodity.
The CFTC lawsuit is not the only legal headache for Binance. The exchange is also facing a lawsuit from the U.S. Securities and Exchange Commission (SEC), which accuses it of operating an unregistered securities exchange and deceiving investors about its trading volumes and controls. The agency filed its complaint on June 5, 2023, citing several practices first reported by Reuters in a series of investigations into the exchange.
Binance has said it is committed to complying with local regulations and working with authorities to foster innovation and growth in the crypto space.
