SEC Files Lawsuit Against Binance, Prompting Sharp Decline in Crypto Market
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance. With the spread of the news, the cryptocurrency market experienced a sharp decline.
The SEC has filed a lawsuit against Binance and its CEO Changpeng Zhao, accusing them of violating U.S. securities laws in 13 different charges. The allegations in the lawsuit include listing and selling securities-class crypto assets on the Binance platform, engaging in exchange, brokerage, and clearing activities in the U.S. without registration, and failing to restrict U.S. citizens’ access to Binance.
In the filing submitted to the Federal Court, the SEC alleged that Binance violated securities laws, putting investor assets at serious risk and generating billions of dollars in revenue.
Binance has been operating under regulatory pressure in the United States for some time. The U.S. Commodity Futures Trading Commission (CFTC) also filed a lawsuit against Binance and Changpeng Zhao in recent months. Additionally, it is known that the U.S. Department of Justice has been investigating the cryptocurrency exchange for the past two years. In light of all these negative developments, allegations have emerged in the mainstream media that Binance used customer funds and controlled the funds of its U.S. affiliate, Binance.US.
SEC classifies 12 altcoins as securities
In the SEC’s complaint against Binance, 12 altcoins were specifically mentioned as securities. These crypto assets include major ones like BNB, Solana (SOL), Polygon (MATIC), and Cardano (ADA), as well as Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and COTI. It is noteworthy that Ethereum was not mentioned as a security in the SEC’s complaint.
Binance responds to the SEC lawsuit
In a statement released by Binance, it was stated that they had negotiated with the SEC in good faith, but the regulatory agency chose to cut off communication and act unilaterally.
Binance denied the allegations that user assets were at risk and declared that all funds on the main platform and its subsidiaries were secure. Furthermore, it was emphasized that Binance is not a U.S. exchange, and therefore, the potential actions of the SEC would be limited. The statement made by the exchange highlighted that they would fight the lawsuit with all their strength and continue to collaborate with regulators in the United States and other countries.
Cryptocurrency market experiences a sharp decline
The news of the SEC filing a lawsuit against Binance had a significant impact on the cryptocurrency markets, leading to rapid sell-offs.
Bitcoin, which was trading in the range of $26,600 to $26,800 in the previous sessions, dropped over 5% within hours, reaching a price as low as $25,300. Ethereum faced a loss of nearly 5% during the initial selling wave, falling to $1,778 before finding support around the $1,800 range.
The sell-off in the altcoin market was more severe. Binance’s native asset BNB quickly declined by nearly 10% to the $270 range from $300. Other assets in the top 10 also experienced value losses ranging from 5% to 9% in the initial reaction to the news.
Among the top 100 cryptocurrencies, the altcoins that experienced the largest drops were LUNC, PEPE, and CFX, with losses of nearly 20%. The total market capitalization fell below $1.1 trillion, and the average trading volume approached $50 billion, dominated by selling pressure.
The sharp declines also led to rapid liquidations in crypto futures trading. The size of closed futures positions exceeded $300 million, with 92% of these positions being
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