In a harsh rebuke, CNBC's Jim Cramer has called the recent lawsuit filed against Binance by the U.S. Securities and Exchange Commission (SEC) "devastating" for the company.
The suit alleges that the world's largest cryptocurrency exchange and its boss Changpeng Zhao (CZ) violated multiple U.S. securities laws, including fraud.
According to Cramer, the implications of the case could force Binance and its supporters to do some "serious soul-searching" and "expend real capital to maintain what looks to be a sham."
The lawsuit asserts that Binance knowingly evaded regulatory oversight to increase its profits while jeoparadizing investors.Binance's own BNB token has felt the ripple effects of the allegations, dropping more than 6% following the announcement.
The SEC further contends that both the BNB token and BUST stablecoin are unregistered securities.
This lawsuit came on the verge another SEC action against cryptocurrency exchange Coinbase, alleging similar unregistered operations. However, Coinbase has not been accused of fraud. CEO Brian Armstrong also has not been named as a defendant.
Cramer, known for his straightforward financial advice on CNBC's "Mad Money," previously voiced criticism for cryptocurrency exchanges, including Binance and Coinbase.
Last year, he opined that he found DraftKings to be more trustworthy than Binance and went as far as to say that Binance has "no real legitimacy."
It remains to be seen how the recent SEC lawsuits against Binance and Coinbase will impact the future of these cryptocurrency exchanges and the industry as a whole.