The SEC Draws Parallels Between Terraform Labs and Binance Cases
The US Securities and Exchange Commission (SEC) has filed a motion in the US District Court for the District of Columbia, highlighting similarities between its case against Terraform Labs and its enforcement action against Binance. The SEC emphasized a December 28 ruling against Terraform Labs by Judge Jed Rakoff, who sided with the SEC and determined that certain tokens involved in the alleged fraud were securities. The SEC believes this ruling is relevant to its case against Binance’s stablecoin BUSD, as well as Binance’s staking-as-a-service and Simple Earn programs.
The Charges Against Binance and Changpeng Zhao
The charges against Binance and its former CEO, Changpeng Zhao, include operating unregistered exchanges, misrepresenting trading controls, and the unregistered offer and sale of securities. The SEC alleges that high-value US customers continued to trade on Binance.com despite claims that they were restricted. Binance.US is also accused of being secretly controlled by Zhao and Binance. SEC Chair Gary Gensler accused Zhao and Binance of engaging in deceptive practices involving conflicts of interest and evasion of the law. The SEC claims that Binance generated over $11.6 billion in revenue from US customers.
Additional Charges and Broader Regulatory Focus
In addition to the charges against Binance, the SEC has also charged Binance for the unregistered offers and sales of other cryptocurrencies and crypto-lending products. The complaint notes that Binance secretly controls assets staked by US customers in BAM Trading’s staking program. These cases against Terraform Labs and Binance are part of a series of SEC enforcement actions targeting platforms offering unregistered securities. Other companies such as Coinbase, Ripple, and Kraken are also facing lawsuits from the SEC, indicating a broader regulatory focus on the cryptocurrency sector.
Hot Take: SEC Cracks Down on Unregistered Securities in the Crypto Industry
The SEC’s recent actions against Terraform Labs and Binance demonstrate its determination to crack down on platforms offering unregistered securities in the cryptocurrency industry. By drawing parallels between these cases, the SEC aims to strengthen its case against Binance and hold the company accountable for its alleged violations. These enforcement actions are part of a larger regulatory trend targeting various companies in the crypto sector, signaling increased scrutiny and potential legal consequences for those operating outside regulatory frameworks. The outcome of these cases will likely have significant implications for the future regulation of cryptocurrencies and related services.
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