SEC Intensifies Scrutiny of Binance's Token Listings and Trading Practices in Revised Complaint
The SEC has filed a proposed amended complaint against Binance, increasing its scrutiny of the exchange’s token listings and trading practices. The revised complaint addresses earlier concerns and strengthens allegations that Binance offered unregistered securities through its BNB token and other digital assets. This move follows a judge’s decision to allow most of the SEC’s charges to proceed while dismissing others.
Because Bitcoin
September 16, 2024
According to a recent CoinDesk report, he U.S. Securities and Exchange Commission (SEC) has submitted a proposed amended complaint against Binance, aiming to address issues from its original lawsuit. This comes after a federal judge allowed most of the SEC’s charges to move forward but dismissed others. Filed Thursday, the revised complaint tackles concerns around Binance’s BNB sales and Simple Earn product while strengthening charges related to Binance allegedly offering unregistered securities through 10 digital assets.
The SEC clarified that the previous claims were dismissed due to insufficient factual support, not legal flaws, in applying the Howey test to determine whether the assets in question were securities. Originally filed in June 2023, the lawsuit accused Binance of operating as an unregistered broker, clearinghouse, and trading platform, as well as selling unregistered securities through BNB, the BUSD stablecoin, and staking services. In June 2024, Judge Amy Berman Jackson dismissed some charges, particularly related to Binance’s Simple Earn product and secondary BNB sales, but allowed most allegations to proceed.
A key issue in the case involves whether the SEC’s claims about 10 cryptocurrencies—SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI—still stand. The new complaint reinforces these claims, addressing dismissal arguments and focusing on Binance’s role in promoting these assets. According to the SEC, Binance played a crucial part in the crypto markets by amplifying promotional statements and information from issuers, which boosted investor interest.
The amended filing also highlights that Binance marketed BNB as an investment in its platform’s growth, with investors expecting returns as the platform expanded. It further alleges that Binance paid U.S. employees, including BAM Trading executives, in BNB, comparing its employee token option plan to stock options.
Additionally, the filing expands on Binance’s promotion of the 10 digital assets, alleging that both Binance and BAM Trading encouraged investment by selectively sharing information and reinforcing issuers' promotional efforts. The SEC accuses Binance of negotiating agreements with token issuers to drive trading on its platform.
The SEC also revised its terminology, replacing "crypto asset securities" with "crypto assets that were offered and sold as securities." The agency clarified that it’s not referring to the assets themselves as securities, but rather the investment contracts and expectations tied to their sale. The SEC maintains that while these assets may have been sold as securities during their ICOs, their promotion and economic realities continue to meet the Howey test.
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