Binance accused of commingling user funds and other malpractices, SEC designates MATIC, SOL, and others as securities.
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Binance for various malpractices. The SEC’s lawsuit accuses Binance of mishandling customers’ funds and targets several altcoins, including Polygon (MATIC) and Solana (SOL).
The lawsuit includes 13 civil charges against Binance and its CEO, Changpeng “CZ” Zhao. The SEC alleges that Binance has not properly restricted US customers from its Binance.com platform and that the company circumvents this rule for its “high-value US customers.” Additionally, the SEC claims that Binance misappropriated billions of dollars worth of user funds using Sigma Chain, a separate entity controlled by Zhao.
The complaint alleges that Binance’s revenue from June 2018 to July 2021 was at least $11.6 billion.
The SEC claims that Binance knowingly committed these offenses for profit. Gurbir S. Grewal, the director of the SEC Division of Enforcement, stated in a release:
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“We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk – all in an effort to maximize their own profits.”
The SEC filed the complaint at a federal district court in Washington on Monday.
Binance Responds to SEC Lawsuit
Binance expressed disappointment at the SEC’s lawsuit in a public response. The exchange claims to have always cooperated with the SEC through all its investigations and answered all questions. Binance then criticized the lawsuit, saying that the SEC abandoned all “good-faith discussions” and decided to litigate instead.
The exchange claims that the SEC is deliberately refusing to clarify its position, suggesting that obscurity is fueling the commission’s crackdown. Binance stated:
“While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. We intend to defend our platform vigorously.”
The response also denies the SEC lawsuit’s allegations that Binance risked users’ funds. Regardless, Binance promised to keep interfacing with all regulators in and out of the US.
SEC Says Cardano, Solana, and BNB are Securities
In the SEC’s lawsuit, the commission designated several altcoins within and outside the Binance ecosystem as securities. In addition to many other cryptocurrencies it previously considered securities, the SEC said BNB, BUSD, Cardano’s ADA, and Polygon’s MATIC tokens qualify. Other tokens mentioned include Solana, Cosmos, Decentraland, Axie Infinity, COTI, The Sandbox, Filecoin, and Algorand.
Shortly after the SEC’s lawsuit became public, several of the tokens lost value. However, the SOL token lost the most, falling over 6% and trading at $20.14 less than an hour after. Over the last 24 hours, SOL has fallen 7.26%, while MATIC has lost 8.37%. ADA, ALGO, and BNB have all fallen 7.15%, 9.48%, and 11.17%, respectively.
