In a significant turn of events, Binance, one of the world’s most prominent cryptocurrency exchanges, has come under the scanner of the US Securities and Exchange Commission (SEC). According to a recently filed court document, the SEC alleges that Binance’s platforms, including Binance.com and Binance.US, have offered and sold assets identified as securities.
The SEC claims encompass various crypto assets, namely BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI, which the document refers to as “Crypto Asset Securities.”
The SEC asserts that each unit of these crypto assets on Binance platforms trades at the same price, suggesting their interchangeability. Moreover, the SEC alleges that any fluctuations in price affect all tokens of the same asset equally, reinforcing that one token is as valuable as another on a pro rata basis.
The purchase of these crypto assets does not bestow upon the investor any unique rights, such as separate account management or independent returns that other investors do not have access to.
Broad availability and no trading restrictions
The contentious tokens are available for purchase to anyone who creates an account with the Binance platforms. Binance does not limit the number of units an investor can buy, nor does it mandate purchases tied to any non-investment use of the asset.
These crypto assets can be transferred and resold on the Binance platforms or other crypto trading platforms without any discernible restrictions on resale.
Inclusion of previous SEC Enforcement Targets
Furthermore, the SEC alleges that Binance platforms offer trading of crypto assets that have been previously targeted by SEC enforcement actions based on their status as securities. These include AMP (the AMP token), REP (the Augur token), UST (the TerraUSD token), and TRX (the token associated with the Tron network).
Issuance and distribution of crypto asset securities
To win the Exchange Act claims, the SEC needs to prove that the Binance platforms were involved in activities related to a single crypto asset security. However, the document includes additional details on ten Crypto Asset Securities, alongside BNB and BUSD, which have been made available on the Binance platforms.
According to the SEC, these assets have been offered and sold as investment contracts from their first sale, making them securities. Furthermore, Binance platforms do not appear to restrict any issuer of these assets from offering, selling, or distributing their crypto assets on their platforms, a practice which continues today.
This lawsuit comes as a significant development in the crypto space and will be closely watched for its potential impacts on crypto exchanges and regulations worldwide. As the legal battle ensues, the outcome could hold significant implications for the future of the cryptocurrency industry.
