The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, one of the world's largest cryptocurrency exchanges, and its CEO Changpeng Zhao (CZ), identifying 12 specific crypto tokens as securities. In the lawsuit, the SEC alleges that Binance has made these tokens available for trading as investment contracts, thus classifying them as securities.
The SEC's lawsuit also names Bam Trading Services, the operator of Binance's U.S.-based platform Binance.US, and its parent company Bam Management US Holdings as defendants. According to the lawsuit, CZ owns 81% of Bam Management.
The SEC claims that the defendants have unlawfully solicited U.S. investors to buy, sell, and trade these crypto asset securities through unregistered trading platforms on Binance.com and Binance.US. The specific tokens highlighted as securities in the lawsuit are BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI.
The lawsuit further mentions that Binance.com lists more than 350 crypto tokens, some of which have previously been subject to SEC enforcement actions due to their classification as crypto asset securities. Examples mentioned in the lawsuit include AMP, REP, UST, and TRX.
It's worth noting that bitcoin (BTC) and ether (ETH) are not included in the list of tokens explicitly identified as securities in the lawsuit. SEC Chairman Gary Gensler has previously indicated that, in his view, all crypto tokens except for bitcoin should be classified as securities. However, he did not provide a definitive stance on whether ether is a security or a commodity during his testimony before the House Financial Services Committee. In contrast, the chairman of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, has asserted that ether should be classified as a commodity.
While the SEC's position carries weight, legal experts emphasize that the final interpretation and application of the law rest with the judiciary, not with the SEC chairman or any regulatory body. This ongoing lawsuit between the SEC and Binance will likely shed light on the legal status of these specific crypto tokens and may have broader implications for the cryptocurrency industry as a whole.
