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Shares of U.S.-based cryptocurrency exchange Coinbase plummeted after word broke that the Securities and Exchange Commission was suing rival trading platform Binance.

Shares declined almost 12% from their Friday close after news of the lawsuit first hit. They’ve since recovered slightly and are down 10.3% at $57.91, according to TradingView.

The SEC alleges Binance, the world’s largest crypto trading platform, and affiliated companies misled customers and misdirected funds to a separate investment fund owned by the company’s CEO, Changpeng ‘CZ’ Zhao.

Coinbase has had its own issues with the SEC, including an investigation into the company’s digital asset listings, staking-as-a-service, institutional trading and wallet services. The company has, in turn, sued the SEC in the hope of forcing the regulatory agency to define rules regarding the regulation of digital assets.

U.S. regulators have been ramping up scrutiny of cryptocurrency trading and the platforms that facilitate such activity, especially since the fallout caused by the collapse of the FTX exchange.

Coinbase didn’t immediately respond to a request for comment from The Block.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance will defend itself “vigorously” against the SEC claims contained in a lawsuit filed Monday.

The American regulator accused Binance and its CEO, Changpeng Zhao, of violating U.S. securities laws and orchestrating an “extensive web of deception” to mask its activities in the country. 

In the statement, Binance argued that it sought to cooperate with the SEC and pursue a settlement over the agency’s previously reported investigations into the crypto exchange. 

“Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations,” Binance said. “But despite our efforts, with its complaint today the SEC abandoned that process and instead chose to act unilaterally and litigate. We are disheartened by that choice.”

Binance’s statement echoed a refrain common among critics of the SEC and its chair, Gary Gensler. The exchange alleged that “the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology.”

The exchange also pushed back against the complaint’s contention that Binance’s practices put customer funds at risk. “This case arises from Defendants’ blatant disregard of the federal securities laws and the investor and market protections these laws provide. In so doing, Defendants have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk,” the SEC complaint said.

“All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary,” Binance said in its statement. 

Notably, Binance claimed that because it is not based in the U.S., “the SEC’s actions are limited in reach.” 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The surge in DYDX comes as the SEC alleges BNB and BUSD – tokens belonging to centralized exchange Binance – are unregistered security offerings.

The world’s largest crypto exchange was sued for multiple securities law violations by the U.S. Securities and Exchange Commission on Monday.

Shares of Coinbase (COIN) were down 10% after news broke that the Securities and Exchanges Commission (SEC) sued Binance on allegations of violating federal securities law on Monday.

The U.S. Securities and Exchange Commission (SEC) today explicitly called 12 tokens securities in its lawsuit against Binance, its CEO Changpeng Zhao and Binance U.S.

Those 12 tokens are 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). 

“Since the Binance Platforms launched, Defendants have made available for trading on them crypto assets that are offered and sold as investment contracts, and thus as securities,” the SEC said in the lawsuit regarding these 12 tokens, adding that the list is not exhaustive. 

Notably, the SEC did not name ether (ETH) as a security in the lawsuit. In April, SEC Chair Gary Gensler refused to say whether ETH, the second-largest cryptocurrency by market cap, was a security during a nearly five-hour hearing. Earlier this year, Gensler told New York Magazine that “everything other than bitcoin” is a security.

The SEC alleged in the lawsuit that Binance and affiliated companies repeatedly lied to customers and misdirected funds to a separate investment fund owned by Zhao, in an echo of similar accusations against Binance’s former rival FTX and its founder Sam Bankman-Fried. The SEC enforcement action follows a similar suit filed in March by the Commodity Futures Trading Commission against Binance.

The price of bitcoin, BNB and other tokens have declined since the news of the lawsuit broke. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

And that’s okay.

The U.S. Securities and Exchange Commission has sued Binance over several alleged violations of the country’s securities laws.

The SEC alleged in a lawsuit that Binance and affiliated companies repeatedly lied to customers and misdirected funds to a separate investment fund owned by Binance founder and CEO Changpeng ‘CZ’ Zhao, in an echo of similar accusations against Binance’s former rival FTX and its founder Sam Bankman-Fried.

The suit, which if successful could bar Binance and Zhao from business in the U.S., also alleges that the company and its affiliate BAM Trading operated as an unregistered securities exchange, broker-dealer and clearing agency, along with selling unregistered securities including BNB and BUSD.

SEC Chair Gary Gensler blasted Zhao and Binance entities as “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”

“As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied,” Gensler said in a release announcing the enforcement action. “They attempted to evade U.S. securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value U.S. customers on their platforms. The public should beware of investing any of their hard-earned assets with or on these unlawful platforms.”

‘Elaborate scheme to evade U.S. federal securities laws’

Similar to a complaint filed by the Commodity Futures Trading Commission in March, the SEC alleges that Binance unlawfully operated in the U.S. “as part of an elaborate scheme to evade U.S. federal securities laws by claiming that BAM Trading operated the Binance.US platform independently and that U.S. customers were not able to use the Binance.com platform.”

In allegations that echo similar accusations that FTX and FTX.US were not truly separate, the SEC claims that “in reality, Zhao and Binance maintained substantial involvement and control of the U.S. entity and that, behind the scenes, Zhao directed Binance to allow and conceal many high-value U.S. customers’ continued access to Binance.com.”

The complaint quotes Binance’s chief compliance officer telling a colleague that “[w]e are operating as a fking unlicensed securities exchange in the USA bro.”

The SEC also alleges that Binance.US lied about market manipulation prevention and allowed wash trading by an undisclosed “market making” trading firm, Sigma Chain, which is also owned by Zhao.

“We will issue a response once we see the complaint,” Zhao wrote on Twitter Monday. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance’s BNB token has fallen in value in the wake of news that the U.S. Securities and Exchange Commission had sued the crypto exchange giant.

Binance Coin (BNB) is trading at about $285 against USDT, down about 6.7% in the last 24 hours, according to TradingView data. 

The SEC said in its court filing that it considers BNB a security under U.S. law.

As expected, crypto prices across the market fell on the news. Bitcoin is down about 2.7% while ether has fallen roughly 1.9%. 

In a statement, Binance CEO Changpeng Zhao said: “Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits. We will issue a response once we see the complaint. Haven’t seen it yet. Media gets the info before we do.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The U.S. Securities and Exchange Commission has sued Binance Holdings Ltd. and CEO Changpeng Zhao, Bloomberg News reported, citing a federal court filing.

The suit accused them of breaking U.S. rules, Bloomberg said.

“Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits,” Zhao said on Twitter. “We will issue a response once we see the compliant. Haven’t seen it yet. Media gets the info before we do.”

The price of bitcoin fell immediately following the news, declining 2.1% to $26,534, according to TradingView.

This story is developing and will be updated.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.