Coinbase COIN Stock Drops 10% Following SEC’s Lawsuit Against Binance
Shares of major US-based cryptocurrency exchange Coinbase plunged 10% after the US Securities and Exchange Commission announced charges against Binance and its founder Changpeng Zhao.
Coinbase stock ended the last trading day on Monday trading at $58.71, down by 9.05%, according to data by Yahoo Finance.
The sharp drop came after the SEC sued Binance and its CEO for their “blatant disregard of the federal securities laws,” unveiling 13 charges against the platform, including operating an unregistered exchange.
The agency accused Binance of breaking the law by offering unregistered securities to the general public, including its BNB token and BUSD stablecoin.
In the complaint, the SEC also labeled some other popular cryptocurrencies, including Solana, Cardano, and Polygon, as securities.
“Since the Binance Platforms launched, Defendants have made available for trading on them crypto assets that are offered and sold as investment contracts, and thus as securities,” the SEC said.
“This includes, but is not limited to, BNB, BUSD, and the units of each of the crypto asset securities further described below—with trading symbols SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI (collectively, the ‘Crypto Asset Securities’).”
The lawsuit also alleged that a staking service offered by Binance violated securities laws.
Other charges levied against Binance by the SEC included the company’s failure to register as a broker as well as its failure to register as an exchange.
The SEC said Zhao and Binance knew that they were operating the Binance.com platform in violation of various US laws.
As Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, ‘we are operating as a f*ing unlicensed securities exchange in the USA bro,’” the commission revealed.
The agency said Zhao and Binance created BAM Management and BAM Trading in 2019 “as part of an elaborate scheme to evade” US laws, by saying that Binance.US platform was run independently and that US customers could not use the Binance.com platform.
Binance Pledges to Fight Back
In response to the lawsuit, Binance said it is prepared to fight back “to the full extent of the law.”
The world’s largest cryptocurrency exchange said that the charges are “just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance” to the crypto industry.
The SEC’s shot at Binance comes as the commission has launched a legal battle against some major crypto companies.
Specifically, the commission has taken enforcement action against crypto exchanges Kraken and Bittrex, as well as crypto lending platform Nexo.
Back in March, the SEC even sent a “Wells notice” to Coinbase, threatening the crypto exchange with legal actions regarding some of its listed digital assets, its staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet.
In response, Coinbase CEO Brian Armstrong accused the agency of engaging in “some really sketchy behavior.”
