SEC Lawsuit Could Disrupt Binance’s Global Expansion Plans
• The U.S Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, its US platform, and CEO Changpeng Zhao for violating securities laws and offering unregistered securities.
• The SEC accused the crypto exchange of offering unregistered securities in the form of its now-paused Binance USD (BUSD) stablecoin and its native token BNB (BNB).
• Reuters had previously reported that the exchange was comingling customer funds with corporate revenue, which the SEC has included in their lawsuit against Binance.
The U.S. SEC’s Lawsuit Against Binance
The United States Securities and Exchange Commission filed a lawsuit against Binance along with its U.S. platform and CEO Changpeng Zhao on June 5 in a Washington, D.C. federal district court for allegedly violating securities laws and offering unregistered securities. The U.S. regulator has accused the crypto exchange of offering unregistered securities in the form of its now-paused Binance USD (BUSD) stablecoin and its native token BNB (BNB). The SEC also deemed its Simple Earn and BNB Vault products as violations of securities law, as well as its staking program. Furthermore, it alleged that Binance US and its legal company, BAM Trading, failed to register as an exchange, broker or clearing agency; it named Zhao as a “controlling person” too.
Commingling Customer Funds
The SEC lawsuit came within weeks of a Reuters report alleging the exchange was comingling customer funds with corporate revenue in 2020 and 2021 on a daily basis; this commingling mainly occurred on accounts held at Silvergate Bank , with amounts reaching billions of dollars; many of these accounts were linked to Zhao himself too.. At first, Binance refuted these claims but later ended up being included in their lawsuits just few weeks after .
Nine Crypto Tokens Deemed As Securities
The suit also listed nine crypto tokens trading on the platform as securities — Solana ( SOL ), Cardano ( ADA ), Polygon ( MATIC ), Filecoin ( FIL ), Cosmos ( ATOM ), The Sandbox ( SAND ), Decentraland ( MANA ), Algorand ( ALGO ) Axie Infinity(AXS) And Coti(COTI). The SEC levied 13 charges against the crypto exchange, its U.S entity ,the CEO for them .
Potential Impact On Global Expansion Plans
This recent spate of regulatory actions taken by US regulators could be seen to be denting any global expansion plans made by major exchanges including world’s largest digital asset exchange ,Binannce .
Conclusion
In conclusion ,the recent accusations made by US regulators against Binannce have caused confusion among many investors resulting into potential damage to their global expansion plans if found guilty .
