June 6, 2023 at 09:45 GMTModified date: June 6, 2023 at 09:46 GMT
June 6, 2023 at 09:45 GMT

Binance Denies Allegations And Vows to Fight SEC

Binance has issued a statement in the wake of the Securities and Exchange Commission (SEC’s) lawsuit against the crypto exchange yesterday.

Binance Denies Allegations And Vows to Fight SEC

Binance has issued a statement in the wake of the United States’ Securities and Exchange Commission (SEC’s) lawsuit against it yesterday.

The company expressed its disappointment with the regulatory watchdog’s decision to file a lawsuit, despite its ongoing efforts to cooperate fully and provide all the necessary information required for investigations. It went on to accuse the SEC of ‘refusing to productively engage’ with the company and provide a clear regulatory framework for companies within the space to abide by.

In the lawsuit, SEC accused Binance of misleading Binance.US customers and allowing them access to its global entity, Binance.com amongst other securities law violations that placed US investors at risk. The leading exchange fired back, claiming that the accusations were false and that all user assets on Binance and its affiliates are safe and secure. It questioned the SEC’s intentions, emphasising that a more diplomatic approach would have been adopted if its real intent was to protect customers rather than make headlines.

Despite the saga, Binance reiterated its commitment to cooperating with law enforcement agencies but also warned that it will ‘vigorously defend against any allegations’.

The Backstory

Yesterday, the United States SEC continued its crackdown on the cryptocurrency space with yet another lawsuit against one of the industry’s biggest players, Binance. It filed 13 charges related to violations of securities law against Binance Holdings Ltd., Binance’s U.S.-based affiliate BAM Trading Services Inc and their founder Changpeng Zhao. 

The SEC accused Binance and Zhao of deceiving investors by claiming that U.S. customers were prohibited from trading on Binance.com, while covertly allowing high-value U.S. customers to continue trading. They also claim that Binance.US, portrayed as a separate independent platform for U.S. investors, was actually controlled by Binance and Zhao, undisclosed to the public.

Binance’s woes were further exacerbated by allegations that it illegally conducted sales of securities through its native token $BNB and stablecoin $BUSD. The 136-paged case document further referred to 10 other cryptocurrencies including Solana ($SOL) and Cardano ($ADA) as securities and accused Binance of enabling their trading. 

‘This includes, but is not limited to, BNB, BUSD, and the units of each of the crypto asset securities further described below — with trading symbols SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI’.

Calls for unity in the industry

In the wake of the lawsuit, the crypto community has lent their support to Binance and CZ, accusing the SEC of unfairly targeting companies in the space. Some notable key players, thought leaders and founders have rallied round Binance and CZ, including Tron founder Justin Sun and Charles Hoskinson, Cardano founder.

‘I wanted to take a moment to express my unwavering support for you. As one of my friends, I trust you and believe in your integrity. We are here for you!

I am fully aware of your dedication to advancing the cryptocurrency industry, and your abilities and ethics are beyond reproach. I have complete faith in your capacity to navigate through this challenge, as you possess strong leadership and decision-making skills. I will stand by you and support you, no matter where or what happens’ – Justin Sun wrote

Hoskinson stated that the attack on Binance is part of a broader agenda to establish a Central Bank Digital Currency (CBDC) in partnership with major banks, giving centralised control over individuals’ financial lives. 

Other members within the crypto space have united in their support, calling out SEC and accusing it of being a corrupt entity. Some also called out its head, Gary Gensler for shilling Algorand ($ALGO), one of the coins it now refers to as a security in a resurfaced clip from 2019.

Binance market reaction

The market took a nosedive following the news yesterday, with BNB taking the most hit as expected. It plunged by almost 8% on the 24-hour chart, trading at about $277 at the time of writing. BTC and ETH are similarly down by 7.64% and 4.74% respectively in the last 24 hours.