The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, a cryptocurrency exchange, for allegedly violating securities laws. This move marks an expansion of the SEC’s oversight to encompass crypto assets valued at over $115 billion.
In the lawsuit, filed on Monday, the SEC identified several tokens that it considers within its regulatory jurisdiction. Trading platforms offering support for these tokens will be required to adhere to stricter protective measures. Consequently, other exchanges may be reluctant to provide support for these digital assets, potentially limiting their tradability on the open market.
The SEC’s filing specifically mentions several top altcoins, including Binance’s BNB, Polygon’s MATIC, Solana’s SOL, Cardano’s ADA, Filecoin’s FIL, and Algorand’s ALGO. In conjunction with other assets like XRP, these tokens bring the total value under the SEC’s purview to $115 billion.
SEC Chair Gary Gensler has previously stated that most tokens are subject to securities laws for the purpose of investor protection. However, this lawsuit marks the first instance of the SEC specifically naming cryptocurrencies, indicating a potentially stricter regulatory approach.
Binance has swiftly responded to the lawsuit, defending itself and claiming that it is an attack on the entire industry. The exchange stated that while it takes the SEC’s allegations seriously, they should not warrant an enforcement action, particularly on an emergency basis. Binance intends to vigorously defend its platform against the lawsuit.
Other industry participants have also voiced support for Binance. Jeff Dorman, Chief Investment Officer at digital-asset specialist Arca, commented that the SEC’s actions may negatively impact U.S.-based exchanges like Coinbase and Kraken, who will have to decide whether to delist tokens deemed as securities. Market makers in the U.S. may also be forced to cease trading certain tokens listed as securities.
Following the announcement of the SEC lawsuit, the entire crypto market experienced a significant downturn. Bitcoin’s price dropped by approximately 4.5%, while other altcoins experienced declines of 6-8%. However, Dorman believes that the lawsuit’s impact on the crypto market will be short-lived, as most cryptocurrencies are traded on offshore exchanges.
Coinbase and Kraken, both facing their own legal battles with the SEC, have not yet commented on the lawsuit against Binance. Coinbase previously stated that it would not delist tokens deemed as securities by the SEC until a final court decision is reached.
The prevailing question within the crypto industry is whether the SEC is planning further aggressive actions and lawsuits akin to its approach to XRP.