Binance, the world’s largest cryptocurrency exchange, has been charged by the Securities and Exchange Commission (SEC) with 13 violations of federal securities laws. According to Jim Bianco, the founder and president of Bianco Research, the SEC’s lawsuit against Binance could be a significant mistake if other nations permit the development of the cryptocurrency industry, which could eventually replace the traditional banking sector. Bianco stated in an email to CoinDesk that if cryptocurrency is the framework for the next financial system, then the lawsuit against Binance is a significant error, and the enforcement action against the exchange is another attempt by U.S. lawmakers to eliminate the cryptocurrency industry from the country.
The Securities and Exchange Commission (SEC) filed a lawsuit on Monday against Changpeng Zhao’s cryptocurrency exchange, accusing it of violating U.S. securities laws by offering unregistered securities and staking services to the general public. This legal action follows the Commission’s lawsuit earlier this year against Justin Sun and three of his companies for the unregistered sale and offer of cryptocurrency asset securities, which is similar to the charges brought against Binance. According to Aaron Kaplan, the co-founder and co-CEO of Prometheum Inc, the parent company of SEC and FINRA-registered digital asset securities trading platform Prometheum ATS and SEC-qualified custodian Prometheum Ember Capital, this significant action by the SEC indicates a shift in the U.S. towards regulated market infrastructure for cryptocurrency, which is expected to benefit the industry and allow innovation to flourish. Kaplan anticipates that the competitive landscape will look different, but it will ultimately result in a net benefit for U.S. investors.
A Binance spokesperson confirmed that the exchange had received a Wells Notice from the SEC earlier this year, which led to the lawsuit. In March, oinbase">Coinbase, a U.S.-based exchange, was also warned that it may face an enforcement action due to its potential listing of unregistered securities. Despite this, oinbase">Coinbase remains committed to the U.S., but it has intensified its operations in other regions, such as Canada and Seychelles. Following the news of the Binance lawsuit, oinbase">Coinbase (COIN) shares fell by 10%. Richard Mico, the U.S. CEO and Chief Legal Officer of Banxa, a payment-and-compliance infrastructure provider, has expressed concern that the ongoing lack of regulatory clarity is causing digital asset ventures to leave the United States for more favorable jurisdictions, potentially depriving the country of jobs and innovation at home.
Although the SEC’s lawsuit against Binance indicates a further crackdown on the cryptocurrency industry, some experts have welcomed the legal action. Steve Rosenblum, the founder of Libertify.com, a risk management platform, believes that the SEC’s lawsuit against Binance in the U.S. is not only justified but also overdue. He notes that Binance has been criticized for its perceived lack of operational transparency, with high-ranking executives within the company being largely inaccessible, which has added to these concerns. Similarly, Valerii Brizhatiuk, co-founder of Swisstronik, an identity-based L1, believes that companies like Binance, which offer a wide range of features, products, and investment services, face challenges when trying to direct these services towards a global user base while still complying with U.S. regulations.
