The US Securities and Exchange Commission (SEC) has cited the recent Terraform Labs ruling during the Coinbase and Binance hearings, strengthening its claim that the cryptocurrency exchanges violated securities laws. This move marks a significant step in the SEC’s ongoing crackdown on the crypto industry.
Key Takeaways
- The SEC is leveraging the Terraform Labs ruling in its cases against Coinbase and Binance.
- Terraform Labs’ tokens UST and LUNA were deemed securities by the SEC.
- Both Coinbase and Binance are accused of offering unregistered securities.
- The SEC’s actions are part of a broader effort to regulate the crypto industry.
SEC’s Case Against Terraform Labs
On December 28, the SEC ruled that Terraform Labs’ tokens UST and LUNA should be considered securities. The regulator cited that Terraform Labs offered and sold unregistered securities, violating Sections 5(a) and 5(c) of the US Securities law. This ruling has set a precedent that the SEC is now using in its cases against other major cryptocurrency exchanges.
Implications for Coinbase and Binance
In its most recent filings, the SEC is using the Terraform Labs case to bolster its arguments against Coinbase and Binance. Both exchanges are accused of operating as unregistered securities exchanges, brokers, and clearing agencies. The SEC has highlighted similarities between Terraform Labs’ activities and those of Binance, particularly regarding its stablecoin BUSD and various staking programs.
Binance’s Regulatory Challenges
Binance has faced significant regulatory scrutiny over the past year. In October, the exchange announced plans to delist eight Binance USD (BUSD) trading pairs as part of a broader strategy to withdraw support for the stablecoin by 2024. Additionally, Binance warned it might soon delist 10 prominent privacy coins due to regulatory concerns. The exchange has also been accused of using customer funds for its own interests, a charge reminiscent of the allegations against the now-defunct FTX exchange.
Coinbase’s Legal Battle
Coinbase has also been under the SEC’s microscope. The regulator has accused the exchange of offering unregistered securities and operating without proper registration. In response, Coinbase has argued that it has made efforts to comply with SEC regulations and has even sought clarity on which tokens the SEC considers securities. Despite these efforts, the legal battle is expected to extend well into 2024.
Market Reactions and Future Outlook
The cryptocurrency market has shown resilience despite the SEC’s actions against major exchanges. While some tokens have faced selling pressure, top cryptocurrencies like Bitcoin and Ethereum have rebounded quickly. However, the classification of certain tokens as securities could lead to their delisting from US exchanges, creating significant regulatory challenges for the industry.
Conclusion
The SEC’s recent actions signal a new era of regulatory scrutiny for the cryptocurrency industry. By leveraging the Terraform Labs ruling, the SEC is setting a precedent that could have far-reaching implications for other crypto exchanges. As the legal battles unfold, the industry will need to navigate an increasingly complex regulatory landscape.
Sources
- US SEC Cites Terraform Case in Coinbase, and Binance Rulings, Cryptonews.
- SEC vs Binance, Coinbase, Kraken Lawsuits Usher Tough New Era, Techopedia.
- Binance, Coinbase head to court; the SEC labels 67 crypto-securities, Cointelegraph.
- Full List of Cryptos Named Securities in SEC Lawsuits, BeInCrypto.
- The SEC Comes for Crypto – Bloomberg, Bloomberg.com.
