It is now official, the Securities and Exchange Commission (SEC) legal attack Binance and his founder Changpeng Zhao also known as the acronym (CZ).
The SEC attacks
The Securities and Exchange Commission filed 13 charges against Binance, the world’s largest crypto exchange, and its founder, Changpeng Zhao, alleging both comingled billions of dollars worth of user funds and sent them to a European company controlled by CZ ( more details here ) .
“Through 13 charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” said SEC Chair Gary Gensler in a statement today.
Furthermore, the SEC alleged that Binance artificially inflated its trading volumes and diverted customer funds, as well as failed to restrict U.S. customers from its platform and misled investors about its market surveillance controls. Binance created separate U.S. entities "as part of an elaborate scheme to evade U.S. federal securities laws," the SEC also alleged.
In a coordinated attack on cryptocurrencies, the financial regulator also made an offensive against the tokens : SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI considered henceforth as securities. We will explain the term “ securities “ later in the article.
The Reaction in the crypto space
On the market side, virtually no crypto was spared from this deluge of sales bringing the market cap to $1.13 Trillion, a -5.6% change in the last 24 hours according to CoinGecko.
We can also note some performance such as the BNB token which is the Binance token that drops by nearly 11%.
Regarding the response from the main party involved in this matter, Binance has reacted on Twitter :
In short, Binance explains being disappointed with the SEC's decision to initiate legal proceedings while discussions between the regulator and the exchange were underway. The platform assures that customer funds are secure and that it will vigorously defend itself.
They also made a post on the Binance blog.
What is the term “securities” and why it matters
Let's go back to the root of the problem. In the financial domain, a commodity refers to a tradable basic product in the market, such as gold, oil, or wheat. Commodities are typically traded based on their intrinsic value and are subject to regulation.
On the other hand, a security represents a tradable financial instrument, such as a stock, bond, or derivative, which confers ownership rights over a company or entity to its holder. Securities are regulated to protect investors and ensure transparency in financial markets.
This would mean that tokens classified as securities will have to comply with stricter regulation.
Conclusion :
The SEC's legal attack on Binance and its founder, Changpeng Zhao, has sparked significant repercussions in the cryptocurrency industry. Binance faces charges of deception, conflicts of interest, and evading the law, while the SEC also targeted certain tokens as securities. The case raises important questions about cryptocurrency regulation and the need for a balanced approach that protects investors without stifling innovation. As the industry evolves, constructive dialogue between regulators and stakeholders is essential to establish clear and effective regulations that foster innovation while ensuring market integrity.
And you what is your thoughts on the situation, do you think the market will suffer even more ?
Thank you for reading
