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This week has been filled with many crackdown efforts by the United States Securities and Exchange Commission (SEC) following the lawsuits filed against the duo of Binance and Coinbase. In one of his comments on the crackdowns, Binance Chief Executive Officer Changpeng 'CZ' Zhao said the market regulator did not sue FTX, despite the widely acclaimed misdemeanor committed by the exchange and its founder Sam Bankman-Fried, which eventually led to its bankruptcy.
The comment from CZ was in response to a tweet from Gemini CEO Cameron Winklevoss, who noted that "Being sued by the SEC used to mean you probably did something wrong. Now it means you're probably doing something right."
They didn't sue FTX. https://t.co/FVgi5l6VcI
— CZ 🔶 Binance (@cz_binance) June 6, 2023
The industry has been enervated with lawsuits that have rocked the industry's two biggest trading platforms within a 24-hour interval. While it remains unclear what the regulator still has up its sleeve, the response from both exchanges' leaders showcases their readiness to fight the SEC, even if the case is dragged into the courts.
The SEC levied 13 different allegations on Binance exchange, including the illegal operations of an unregistered exchange and direct flouting of Know-Your-Customer (KYC) rules.
Impact on industry
The lawsuits filed against both exchanges, though different in many aspects, have one underlying element in common: the trading of unregistered crypto securities. By the terms of the charges, the market regulator designated Cardano (ADA), Solana (SOL), Filecoin (FIL) and Decentraland (MANA), among others, as securities.
This designation led to a fall in the prices of these digital currencies. Even at the time of writing when the broader market has started seeing some mild recoveries, Cardano is still down by 2.82% to $0.3429 on fears of possible delisting from Robinhood, while Polygon (MATIC) has shed 3.17% of its price over the past 24 hours.
Mushumir Butt
Gamza Khanzadaev
Yuri Molchan
