SEC Lawsuit Seen as an Attack on the Entire Industry, Calls for Unified Effort in Establishing Common Sense Rules and Guidelines

• The SEC alleges that Binance has accrued more than $11.6 billion since at least July 2017 through running an unregistered securities exchange.
• The SEC is reportedly looking for a settlement with Binance among other exchanges but has been blamed for regulating the industry through enforcement.

After enjoying bountiful results during the first quarter and partially in the second quarter of 2023, the crypto market has taken a bearish trajectory during the second week of June.

According to the latest crypto market data, Bitcoin price dropped as low as $25.4k in the last 24 hours but had since stabilized around $25.7k during the mid-London trading hours. More than $295 million was liquidated from the crypto market with over 12k Bitcoins withdrawn from Binance in the past 24 hours.

On Monday, the United States Securities and Exchange Commission (SEC) filed charges against Binance and its CEO Changpeng Zhao (CZ) for ostensibly listing unregistered securities including Cardano (ADA), Polygon (MATIC), Solana (SOL), COTI, MANA, FIL, and Algorand (ALGO) among many others.

Crypto Assets Under Attack in United States 

The SEC charges on Binance and CZ alleges that the two knew everything they were doing was wrong and violated the country’s securities laws. The SEC chair Gary Gensler has time and again noted that the crypto market under the Howey test is full of unregulated securities. With Binance having listed many tokens for trading in the United States and overseas, Gensler has accused the exchange of aiding the exploitation of investors without proper registration. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement said:

We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk – all to maximize their profits,

The SEC stated that Binance officials knew the operation of unlicensed securities exchange in the country is against the set laws since 2018.

Today we charged Binance Holdings Ltd. (Binance); U.S.-based affiliate, BAM Trading Services Inc., which, together with Binance, operates https://t.co/swcxioZKVP; and their founder, Changpeng Zhao, with a variety of securities law violations.https://t.co/H1wgGgR5ir pic.twitter.com/IWTb7Et86H

— U.S. Securities and Exchange Commission (@SECGov) June 5, 2023

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In his defense, CZ has highlighted that the entire crypto industry is under attack from the current regime led by the Biden administration. Moreover, other global jurisdictions including European markets and Middle East countries have already enacted friendly crypto regulations that have attracted international investors. Already, Coinbase Global, Gemini Exchange, and Binance have increased their presence in these markets to ensure their future growth prospects.

It’s an attack on the entire industry.

— CZ 🔶 Binance (@cz_binance) June 5, 2023

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Way Forward 

The SEC alleges that Binance has accrued more than $11.6 billion since at least July 2017 through running an unregistered securities exchange. As a result, the SEC wants Binance to register as an exchange, broker-dealer, and clearing agency. According to experts, the SEC is looking for a settlement since an entire ban on digital assets is not likely at this stage. Moreover, more than a third of the American population is alleged to have interacted with crypto in the recent past.

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