• SEC strikes again as it lists 12 cryptos as securities, casting a shadow of doubt about their future.

• SEC accuses Binance and Changpeng Zhao of aiding US customers to circumvent controls. 

The US Securities and Exchange Commission (SEC) strikes again with another list of cryptos that it believes are securities. In its lawsuit against Binance, its CEO Changpeng Zhao, and Binance U.S., SEC listed 12 tokens namely; “BNB (BNB), Binance USD stablecoin (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos Hub (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS,) and Coti (COTI),” as securities.

Earlier this year, SEC Chair Gary Gensler stated categorically in an interview with the New York Magazine that only Bitcoin is not a security. 

In the lawsuit, SEC accused Binance of unlawfully engaging in several unregistered offers and also selling crypto asset securities as well as other investment schemes. On another point, Binance Services under the leadership of Changpeng Zhao reportedly offered three security functions without a license.

These are exchange, broker-dealer, and clearing agencies. According to the SEC, CZ took a calculated plan to evade registration required under the federal securities law. It is reported that he created BAM Management and BAM Trading in the US to deceive the public and the authorities.

As one part of this plan to evade United States regulatory oversight over Zhao, Binance, and the Binance.com Platform, Zhao and Binance created BAM Management and BAM Trading in the United States and claimed publicly that these entities independently controlled the operation of the Binance.US Platform.

Behind the scenes, however, Zhao and Binance was intimately involved in directing BAM Trading’s U.S. business operations and providing and maintaining the crypto asset services of the Binance.US Platform.

Binance and CZ are Accused of Aiding US Customers Access the Platform

Another plan by CZ as claimed by the lawsuit was to consistently claim to the public that the platform does not provide services to US persons. However, it was concealing US data to enable them to trade. In 2019, it can be recalled that Binance announced implementation controls to block US customers from accessing the platform.

Interestingly, the lawsuit claims CZ did the opposite of this as he directed highly valued US customers to circumvent the controls. 

Lacking regulatory oversight, Defendants were free to and did transfer investors’ crypto and fiat assets as Defendants pleased, at times commingling and diverting them in ways that properly registered brokers, dealers, exchanges, and clearing agencies would not have been able to do.

For example, through accounts owned and controlled by Zhao and Binance, billions of U.S. dollars of customer funds from both Binance Platforms were commingled in an account held by a Zhao- controlled entity (called Merit Peak Limited), which funds were subsequently transferred to a third party apparently in connection with the purchase and sale of crypto assets.

Some key players in the crypto industry have on multiple occasions condemned the actions of the SEC, as they find it inappropriate to put emerging technologies and assets under the same rules as traditional assets. Ripple pro lawyer, Jeremy Hogan recently stated that the attack on the crypto industry is coordinated and political, and advised all targeted and potential victims to go to court when the need arises.

According to him, this should be their defense as they await crypto regulation. At this point, the ruling of the SEC vs Ripple case could likely have a huge impact on these cryptos claimed to be securities.  

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