The US Securities and Exchange Commission (SEC) has intensified its scrutiny of the cryptocurrency industry, filing lawsuits against major exchanges Binance, Coinbase, and Kraken. The SEC’s actions are part of a broader effort to enforce securities laws within the rapidly evolving crypto market.
SEC Leverages Terraform Labs Ruling
The SEC has cited its recent ruling against Terraform Labs as a precedent in its cases against Coinbase and Binance. On December 28, the SEC determined that Terraform Labs’ tokens, UST and LUNA, should be classified as securities. This ruling was based on the finding that Terraform Labs had offered and sold unregistered securities, violating Sections 5(a) and 5(c) of the US Securities law.
In its latest filings, the SEC is using the same argument against Coinbase and Binance. The regulator claims that both exchanges have engaged in similar activities by offering and selling unregistered securities. The SEC has highlighted that Binance’s "so-called stablecoin" BUSD, along with its staking-as-a-service, BNB vault, and Simple Earns programs, are comparable to the Terraform Labs case.
Ongoing Legal Battles
Both Coinbase and Binance are currently embroiled in 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 as the SEC suggested that tokens listed on the exchange could be classified as securities, potentially imposing new regulatory requirements.
Binance’s Strategic Moves
In response to regulatory pressures, Binance has announced plans to delist eight Binance USD (BUSD) trading pairs by 2024. The affected pairs include:
- AMB/BUSD
- DASH/BUSD
- FIDA/BUSD
- HARD/BUSD
- HOT/BUSD
- IOST/BTC
- NULS/BUSD
- PORTO/BUSD
- REQ/BUSD
Additionally, Binance has warned that it may soon delist 10 prominent privacy coins, such as Monero, Zcash, and Horizen, due to regulatory concerns. These tokens have been given 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 lawsuits against Binance, Coinbase, and Kraken signal a tough new era for the cryptocurrency industry. The regulator’s actions underscore the importance of compliance with securities laws and highlight the potential risks for exchanges that fail to adhere to regulatory standards. As the legal battles unfold, the outcomes could have significant implications for the future of cryptocurrency regulation in the United States.
