The U.S. Securities and Exchange Commission (SEC) has sued Binance. This marks the latest chapter in the SEC's highly publicized and protracted battle against crypto companies.
This is their second lawsuit from a financial regulator since that of the CFTC. So, unsurprisingly, they put out a public statement lamenting the SEC's suit, citing brute enforcement action on their part.
Before we proceed any further, let's consider what went down between the two parties and what effect it could have – if any – on the crypto market.
The U.S. Securities and Exchange Commission levied 13 charges against Binance with allegations ranging from diverting investors' funds to inflating its financial records, amongst others.
Firstly, the commission, through the lawsuit, alleged that the crypto exchange disregarded the federal securities laws. It was accused of illegally enriching itself with billions of U.S. dollars while placing investors' funds at serious risk.
Its platforms – Binance.com and Binance.US – that were used for trading assets were said to be unregistered, with the owner, Changpeng Zhao (CZ), pointed at for criticism. The commission accused the company of mixing customers' funds, with CZ further accused of secretly overseeing Binance.US and an entity of his inflating the latter's trading volume.
Also, the exchange was accused of unlawfully offering 'unregistered securities,' i.e., the BNB token and Binance-linked BUSD stablecoin, to the general public.
Native tokens for the Cardano (ADA), Solana (SOL), Coti (COTI), Polygon (MATIC), and Algorand (ALGO) blockchains, Cosmos hub (ATOM), Filecoin network (FIL), Sandbox platform (SAND), Axie infinity (AXIE) and Decentraland (MANA) were labelled securities.
The U.S. Securities and Exchange Commission alleged further that the company had made prior plans to evade U.S. laws. It was said that its Chief Compliance Officer once admitted, "We are operating as a fking unlicensed securities exchange in the USA, bro."
Binance.US responded with a long thread on Twitter, claiming that the suit was "baseless." The company publicized a statement on its blog, pleading innocence and vowing to "vigorously defend against any allegations to the contrary."
This turn of events has, in no small measure, led to an uproar in the crypto community. Much more than anything, it has reduced interest in crypto.
According to data from Nansen, investors have pulled about $790 million in the last 24 hours. This happened after the lawsuit news broke out.
Secondly, according to Google Trends, google searches about crypto have reduced. Online searches are now at 17 out of 100 – not seen since 2020.
The Crypto Fear and Greed Index also posits numbers that depict fluctuating market sentiments. It has a current score of 53 – which signifies the neutral zone – that has been like that for a month.
After the lawsuit, the total number of cryptocurrencies that the commission called a "security" reached about 61. While it is a drop of water in the ocean of 25,500 total cryptos, it still is a high number.
Furthermore, the SEC Chair, Gary Gensler, once famously claimed that "everything other than Bitcoin" is a security that is subject to their remit. That means it covers more than $100 billion worth of the crypto market – a whopping 10% of its $1.09 trillion crypto market capitalization.
On June 5, BTC hit a 60-day low at $25,744, with traders afraid that a further dip could happen. This came amidst the coin struggling with $26,600 resistance.
Trading volumes in crypto exchanges also recently hit a 32-month low, with the top 10 coins also dropping within the past 24h.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.