The Securities and Exchange Commission (SEC) has filed a lawsuit against Binance and Coinbase, two of the largest cryptocurrency exchanges in the world. The SEC alleges that both exchanges have been selling unregistered securities to US investors, which is a violation of federal securities laws. As a result, both Binance and Coinbase have paused their services while they prepare for legal battles in court.
Here are the most important things to know about the SEC’s lawsuit against Binance and Coinbase:
1. The SEC alleges that dozens of coins sold by Binance and Coinbase are securities. This includes popular cryptocurrencies like Bitcoin, Ethereum, and Litecoin, as well as lesser-known coins like XRP and EOS. The SEC argues that these coins meet the legal definition of securities because they are investment contracts that offer investors the expectation of profits from the efforts of others.
2. Binance and Coinbase are accused of selling these securities to US investors without registering with the SEC. Under federal securities laws, any company that sells securities to US investors must register with the SEC or qualify for an exemption. The SEC alleges that Binance and Coinbase did not register or qualify for an exemption, making their sales illegal.
3. Both Binance and Coinbase have paused their services in response to the lawsuit. Binance has suspended trading and deposits for US customers, while Coinbase has halted trading in some of the affected coins. Both exchanges have promised to fight the SEC’s allegations in court.
In summary, the SEC’s lawsuit against Binance and Coinbase is a major development in the regulation of cryptocurrency. The lawsuit could have significant implications for the industry as a whole, as it raises questions about which cryptocurrencies should be considered securities and how they should be regulated. For now, both exchanges are preparing for legal battles in court while their services remain paused for US customers.