Binance Accused of ‘Tricking People To Buy Crypto”

Sahana Kiran
Source – Unsplash

The cryptocurrency community has been dealt another blow after the Securities and Exchange Commission [SEC] took legal action against Binance. Prior, the CZ-led exchange was already dealing with a lawsuit from the Commodity Futures Trading Commission [CFTC]. In the midst of these legal challenges, the SEC decided to file charges against Binance. As the exchange takes steps to address the lawsuit, numerous assumptions and comments questioning Binance’s credibility have started to emerge.

The recent lawsuit against Binance brings to light several allegations made by the SEC. This includes deception, lack of disclosure, and wash trading. However, it is important to note that these accusations are yet to be proven in court, and Binance is innocent until proven guilty. One aspect of the case, namely wash trading, has caught the attention of GLJ Research’s founder Gordon Johnson, who suggested that Binance may have been engaged in practices that could be seen as “effectively tricking people to buy crypto assets.”

Sheila Warren, CEO of the Crypto Council for Innovation, holds a different perspective on the matter. According to Warren, if the allegations against Binance are proven to be true, both the exchange and the regulators may bear some responsibility. Warren highlighted the strong evidence presented by the CFTC in their case against Binance. However, she criticizes the SEC and its chief. This was for attempting to include a wide range of issues within the current legal action instead of focusing on developing specific regulations. For instance, the latest lawsuit categorizes an array of crypto as securities. This, however, comes with no specific standards or laws. She further added,

“We are again seeing the SEC attempting to make law through this regulation enforcement kind of action and land their position that most tokens are securities without having to go through a rule-making process.”

Why wasn’t XRP included in SEC’s latest lawsuit against Binance?

According to court documents, the SEC has identified ten tokens that it believed have violated securities laws. The SEC has classified Cardano [ADA], Solana [SOL], Binance Coin [BNB], Binance USD [BUSD], Polygon [MATIC], The Sandbox [SAND], Axie Infinity [AXS], Decentraland [MANA], COTI [COTI], and Cosmos [ATOM] as securities in their complaint. These tokens, along with others, were collectively referred to as “crypto asset securities” by the SEC.

The SEC’s big crypto takedown began with labeling XRP as a security. Amidst its ongoing case with Ripple, the SEC did not mention XRP in its latest lawsuit. Further elaborating on the reason, Eleanor Terrett, a journalist at Fox Business tweeted,

Terrett reportedly received information from her “legal sources.” The SEC intentionally excluded XRP from the list of tokens deemed as securities to avoid making “inconsistent decisions.”