The U.S. Securities and Exchange Commission (SEC) recently unsealed a series of documents in a legal case against the U.S. arm of cryptocurrency exchange Binance.
The documents, filed in the U.S. District Court of the Southern District of New York, revealed that the SEC has accused Binance of violating Securities Exchange Act Section 15(b) by failing to register with the SEC as a national securities exchange.
The SEC’s complaint also alleges that Binance passed itself off as a “utility token” exchange, while in reality trading securities tokens. In other words, Binance allegedly violated federal securities laws when they traded tokens deemed to be securities without registering as a national securities exchange.
The filing of the documents marks the beginning of a legal battle between the SEC and Binance, which could have major implications for the cryptocurrency industry.
The SEC has argued that the lack of registration required Binance to register as a “securities exchange” in order to legally trade securities-related tokens and that Binance failed to do so.
The documents unsealed also include previous communications between the SEC and Binance and cover the scope of the investigation and the violations that the SEC alleges Binance had committed.
The SEC has requested documents such as corporate records and financial statements from Binance and is seeking monetary sanctions and an injunction to prevent Binance from continuing to operate without proper SEC registration.
It remains to be seen how the case will be decided, but the news serves as a reminder that the cryptocurrency industry is not immune to applicable securities laws.