Cryptocurrencies decline amid SEC’s Binance prosecution

The Securities and Exchange Commission filed 13 charges against the crypto exchange and its founder Changpeng Zhao., alleging it committed a range of securities law violations

Cryptocurrencies dropped Monday after news of regulatory action against Binance.

The Securities and Exchange Commission filed 13 charges against the crypto exchange and its founder Changpeng Zhao., alleging it committed a range of securities law violations.

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, Securities and Exchange Commission Chair Gary Gensler stated in a news release.

According to a report by Bloomberg News, the Securities and Exchange Commission’s allegation that some tokens that traded on Binance.com and Binance.US were offered and sold as securities could have broad impact for other exchanges where these tokens trade.

The report stated Bitcoin and Binance’s own Binance Coin both declined in price Monday. Bitcoin accounts for around half of the $1.2trln crypto market, while Binance Coin is the fourth biggest token. Binance handles nearly 50 per cent of all crypto trading volume, Bloomberg stated.

As of 4:30 p.m. ET, Bitcoin was changing hands at $25,628, down from $27,093 in the morning.

The Securities and Exchange Commission’s suit is part of a series of actions against Binance and Zhao, including a suit from March by the Commodity Futures Trading Commission (CFTC) and reports of an ongoing probe by the U.S. Department of Justice (DoJ).

It is also taking place at a time when regulatory pressure on the crypto sector has left many crypto firms looking to move their operations abroad.

This is more a corroboration of what people are already anticipating and will just continue the push of putting everything offshore and leaving the U.S. behind, Austin Campbell, adjunct professor at Columbia Business School, told Bloomberg.

Binance stated in a Monday blog post that it was “disappointed” with the Securities and Exchange Commission’s move, contending that the firm collaborated with the regulator’s probe, worked to address its concerns and had expected to reach a negotiated settlement.

While we take the Securities and Exchange Commission’s allegations seriously, they should not be the subject of a Securities and Exchange Commission enforcement measure, let alone on an urgent basis, the firm stated in the post. We aim to defend our platform strongly.

Among the Securities and Exchange Commission’s allegations are that Zhao and Binance allowed American customers to trade on the Binance.com platform while stating publicly that they restrict U.S. customers, that Zhao and Binance control the Binance.US platform while publicly saying that the platform is independent and that Zhao and Binance control the assets of both platforms’ customers and commingle or redirect those assets.