The Securities and Exchange Commission (SEC) has made it very clear it doesn’t care if a crypto company is big or small. It will go after any digital currency enterprise with a persecuting hand, as it demonstrated yet again last month when it announced plans to sue Binance, the largest and most popular digital currency exchange in the world.
The SEC and Binance Go Head to Head
The news caused bitcoin and Ethereum to drop to their lowest points in just over two months, with BTC – the world’s largest digital currency by market cap – falling into the mid-$25K range. That’s a loss of about $2,000 over the past few weeks alone.
The SEC alleges that Binance operated an illegal exchange for years and sold securities without going through the proper registration processes. In addition, the company is also facing allegations that it commingled customer funds with company revenue. If this is true, then Binance clearly took a page out of the FTX playbook.
The now dead trading platform is facing similar charges, as its former founder Sam Bankman-Fried has been accused of mixing customer and company funds and using client money to pay off loans and invest in real estate. The lawsuit from the SEC says:
Defendants’ purposeful efforts to evade U.S. regulatory oversight while simultaneously providing securities-related services to U.S. customers put the safety of billions of dollars of U.S. investor capital at risk and at Binance’s and Zhao’s mercy.
Binance has been sitting in the hot seat for some time. Not long ago, the exchange was also sued by the Commodity Futures Trading Commission (CFTC), which alleged that the trading platform had, for years, violated the Commodity Exchange Act. In a statement, CFTC chair Rostin Behnam claimed:
For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law.
The Company Says It Did No Wrong
Representatives of Binance expressed their disappointment with the decision and said that because of the company’s size and power in the industry, they are an easy target for financial agencies looking to make names for themselves. They said:
We are disappointed that the SEC chose to file a complaint today against Binance seeking, among other remedies, purported emergency relief. We now join [several] other crypto projects facing similarly misguided actions from the SEC, and we will vigorously defend our business and the industry… Because of our size and global name recognition, Binance has found itself an easy target caught in the middle of a U.S. regulatory tug-of-war.
The SEC has been on a rampage for some time, and has been looking to take out major crypto firms including Kraken and Coinbase.
