Earlier this week, the US Securities and Exchange Commission (SEC) brought simultaneous lawsuits against two leading cryptocurrency exchanges, Binance and Coinbase. With their influence, both exchanges decided to fight the legal battle.
Lawsuits against Two Exchanges
The US securities regulator’s on-and-off investigations against big crypto players were known for a while. On Monday, it went public with the lawsuit against Binance, its two affiliated entities, and the Founder/CEO, Changpeng Zhao. The 13 charges against the defendants include operating illegal trading platforms, offering unregistered crypto asset securities, and commingling customers’ funds.
A court filing revealed that the US securities market regulator started investigating Binance in 2020.
When the crypto industry was still reeling from the actions against Binance, the SEC announced another lawsuit on Tuesday against America-listed crypto exchange Coinbase. The charges against this exchange include operating an illegal trading platform that offered unregistered crypto asset securities — the SEC also accused Coinbase of offering a staking-as-a-service program without authorization.
Consecutive Court Motions
Following the lawsuit, the SEC also filed multiple motions in court against Binance – the regulator is seeking permission to freeze the assets of Binance.US. According to the court filing, Binance moved $12 billion in customer funds to entities controlled by CEO Zhao.
The allegations against Binance and Zhao are grave. Though the US operations of Binance were independent on paper, the lawsuit included statements of executives who admitted that Zhao and Binance.com ultimately controlled the executive decisions at Binance.US.
BAM Trading officially operates Binance.US without Zhao in any of its executive roles. However, BAM Trading employees referred to the controls of Zhao and Binance on the company as “shackles” that prevented them from understanding and freely operating the US platform. A former CEO of BAM Trading even told Binance’s CFO that her “entire team feels like [it had] been duped into being a puppet.”
Binance’s Actions
Experts believe that the SEC lawsuit might not damage the global dominance of Binance but would break Binance.US. Indeed, the US affiliate has already made some harsh operational decisions.
Binance.US indefinitely suspended its over-the-counter (OTC) operations and also removed ten crypto pairs listed against BTC and BUSD. The SEC’s complaint…
