The U.S. Securities and Exchange Commission (SEC) has intensified its scrutiny of the cryptocurrency industry, citing the recent Terraform Labs ruling in its ongoing lawsuits against major exchanges Coinbase and Binance. This move signals a stringent new regulatory era for the crypto sector.
SEC Leverages Terraform Labs Ruling
On December 28, the SEC ruled that Terraform Labs’ tokens, UST and LUNA, should be classified as securities. The regulator argued that Terraform Labs had offered and sold unregistered securities, violating Sections 5(a) and 5(c) of the U.S. Securities law. This ruling has become a cornerstone in the SEC’s cases against Coinbase and Binance.
In its latest filing regarding Coinbase, the SEC is leveraging the same argument, asserting that the exchange has similarly violated securities laws. The regulator has also drawn parallels between the Terraform Labs case and Binance’s operations, particularly its "so-called stablecoin" BUSD and its staking-as-a-service, BNB vault, and Simple Earn programs.
Ongoing Legal Battles
Both Coinbase and Binance are embroiled in ongoing legal battles with the SEC. Last year, Coinbase faced increased scrutiny as the SEC ramped up its crackdown on the crypto industry. In 2023, concerns among Coinbase investors grew that tokens listed on the exchange could be classified as securities, a change that would impose new regulatory requirements.
Binance’s Strategic Moves
In October, Binance announced plans to delist eight Binance USD (BUSD) trading pairs as part of a broader strategy to phase out support for the stablecoin by 2024. The trading pairs affected include AMB/BUSD, DASH/BUSD, FIDA/BUSD, HARD/BUSD, HOT/BUSD, IOST/BTC, NULS/BUSD, PORTO/BUSD, and REQ/BUSD.
Additionally, Binance has warned that it may soon delist 10 prominent privacy coins, including Monero, Zcash, and Horizen, due to regulatory concerns. These tokens have received a "monitoring tag" and could be delisted if they fail to meet listing requirements related to team commitment, network security, trading volume, and other factors.
Implications for the Crypto Industry
The SEC’s actions against Coinbase and Binance, bolstered by the Terraform Labs ruling, underscore the increasing regulatory pressure on the cryptocurrency industry. As the legal battles unfold, the outcomes could have significant implications for how cryptocurrencies are classified and regulated in the future.
