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Binance Prepared To “Vigorously” Litigate After SEC Lawsuit

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Binance

Summary:

  • The SEC claims that Binance and its CEO Changpeng Zhao violated U.S. laws by knowingly operating an unlicensed securities exchange.
  • Several tokens like SOL, ADA, and MATIC were labeled securities by the federal regulator in its suit against Binance.
  • CEO Zhao replied “4” calling the lawsuit FUD and the crypto exchange said it’s ready to “defend our platform vigorously” in an official response to the SEC’s claim.

The U.S. Securities and Exchange Commission is suing Binance and its CEO Changpeng Zhao for breaking securities laws and commingling billions of customers funds in a U.S. entity controlled by Zhao.

Per the lawsuit, Binance and its executives knowingly operated an unlicensed securities exchange in the U.S. The court documents filed at a federal court reference a quote from a former Chief Compliance Officer who allegedly admittedly in December 2018 to running an illegal securities exchange on American soil – “we are operating as a fking unlicensed securities exchange in the USA bro”.

The SEC’s suit against Binance also raises concerns for the classification of crypto assets in the future. Indeed, the suit issued the securities label for a basket of cryptocurrencies including BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI.

The news follows speculations that CEO Zhao otherwise known by his initials CZ could step down as CEO. Cryptocurrency prices slid on the back of the news with Bitcoin (BTC) and the total crypto market cap both down over 5% in a matter of hours. BTC dipped below $25,000 and tokens like SOL recorded double-digit losses at press time.

Binance Prepared To “Vigorously” Litigate After SEC Lawsuit 14
BTC/USDT by TradingView

Binance Responds

CZ tweeted “4” shortly after the news broke, essentially calling the lawsuit FUD and said that the Binance team was maintaining steady operations for users. Nansen data showed over $69 million in net outflows following news about the SEC’s lawsuit.

The official response from Binance said the suit serves as an example of the SEC’s “misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.” Binance denied that user assets have ever been at risk and said the company is ready to “defend our platform vigorously.& “

Today’s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology. Unilaterally labeling certain tokens and services as securities – even ones over which other U.S. authorities have asserted jurisdiction – only compounds these problems.

The SEC’s filing shadows a lawsuit from the U.S. Commodity Futures Trading Commission alleging that Binance violated American derivatives laws. Several crypto entities like Coinbase and Kraken have also been the subject of enforcement action from U.S. regulators across federal and state lines.

Previous reports also suggest that more enforcement actions against Binance, CZ, and other crypto players could be on the way as U.S. regulators tighten the noose around crypto.


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