US regulator’s net now covers $155 billion of crypto after lawsuit against Binance
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The US regulator in its complaint against Binance cited a dozen coins as assets that fall under its purview.
PHOTO: REUTERS
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New York - The list of digital tokens deemed as unregistered securities by the Securities and Exchange Commission (SEC) now spans more than US$115 billion (S$155 billion) of crypto after the US agency’s lawsuit against Binance Holdings.
The regulator in the complaint on Monday cited a dozen coins as assets that fall under its purview. Such a designation comes with strict investor protection rules and could make the tokens harder to trade if exchanges shy away from listing them for fear of falling foul of the SEC.
Binance’s BNB – which has a market value of US$44 billion – stablecoin BUSD, Cardano’s ADA, Solana’s SOL, Polygon’s Matic, Filecoin’s FIL and Algorand’s Algo were among those mentioned in the lawsuit.
When added to other tokens like XRP separately targeted by the SEC, the agency has now categorised more than US$115 billion of coins specifically as unregistered securities.
SEC chairman Gary Gensler has long said most tokens are subject to the agency’s investor protection laws and that trading platforms should register with the regulator.
But labelling specific tokens represents a tougher approach. US officials have cracked down on digital assets this year following a rout in 2022 and a series of blow-ups, including the bankruptcy of the FTX exchange.
Delisting risk
“Who actually gets hurt by this is Coinbase, Kraken and other US-based exchanges, who then have to make a decision on whether to delist, and US market makers, who potentially have to stop making markets on some of the tokens being listed as securities,” said Mr Jeff Dorman, chief investment officer at digital asset specialist Arca.
At the same time, he predicted that the lawsuit will not have long-lasting impact on token prices since they are still traded on offshore exchanges.
Filecoin is down roughly 10 per cent in the wake of the SEC’s complaint, while BNB has shed about 9 per cent.
The other assets mentioned are also nursing losses.
In wider digital asset markets, both Bitcoin and a gauge of the top 100 coins have fallen approximately 6 per cent.
Coinbase and Kraken did not immediately respond to an inquiry on the implications of the SEC action.
Coinbase has previously said it may not delist tokens that the SEC deems as securities, pending a final court decision.
Bitcoin, Ether
Mr Gensler has said Bitcoin, the largest cryptocurrency, is not covered by the agency’s securities rules.
But he has been less unequivocal on Ether, the second-largest digital token.
Overall crypto market value stands at about US$1.1 trillion, compared with a peak of more than US$3 trillion during a pandemic-era boom, according to CoinGecko.
In the lawsuit on Monday, the SEC accused Binance and its chief executive Zhao Changpeng
“While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis,” Binance said. “We intend to defend our platform vigorously.”
One of the key SEC cases is a 2020 lawsuit against Ripple Labs.
The complaint alleges the company failed to register XRP as a security.
Ripple’s CEO Brad Garlinghouse said in late May that he expects a court ruling in weeks.
The result could have major implications for US crypto rules. BLOOMBERG
