The Securities and Exchange Commission (SEC) unveiled a high-profile lawsuit against Binance on Monday, targeting not only the exchange but also its CEO Changpeng Zhao. The charges against them include commingling customers’ funds and attempting to evade U.S. securities laws using “sham controls” for determining business partnerships.
Altcoins Also in SEC’s Sights
In addition to Binance, the SEC has identified several altcoins as securities in the lawsuit. These cryptocurrencies are a mix of well-established projects with multi-billion dollar market caps and nascent gaming-centered ventures.
Coins Identified as Securities
- Solana (SOL)
- Cardano (ADA)
- Polygon (MATIC)
- Filecoin (FIL)
- Cosmos Hub (ATOM)
- The Sandbox (SAND)
- Decentraland (MANA)
- Algorand (ALGO)
- Axie Infinity (AXS)
- COTI (COTI)
Among these cryptocurrencies, Binance’s BNB token and the exchange’s stablecoin BUSD are also listed as securities.
The announcement of the SEC’s enforcement action had an immediate impact on the market. Solana experienced a significant drop, losing over 6% and falling to $20.14 within an hour of the news. Alogrand, a coin previously praised by SEC Chair Gary Gensler, declined by 9.9% to approximately $0.13 at the time of writing. Similarly, Polygon and Polkadot recorded losses of 7% and 6.9% respectively over the past 24 hours.
SEC’s Allegations Against Binance
The core allegations against Binance and BAM Trading, the operator of Binance.US, which Binance claims to be a separate entity, include operating as exchanges without proper registration with the SEC. The SEC also claims they acted as broker-dealers and clearing agencies.
According to the lawsuit, certain cryptocurrencies were offered and sold as securities on Binance’s international exchange and Binance.US, depriving investors of essential information about the enterprise and the potential risks involved in investing in these securities.