In a sudden turn of events, after being hit with an enforcement action from the United States Securities and Exchange Commission (SEC), Binance.US has taken another step. The exchange has decided to temporarily halt all USD deposits and withdrawals while it awaits the next action from the SEC.
According to the announcement, the change will happen on June 13 and will make the platform crypto-only. While the Binance-SEC case rages on, the exchange is taking steps to do what it can to serve its customers.
On Friday, Binance.US posted the update on USD channels and the announcement encouraged customers to withdraw their USD via bank transfer by June 13. However, the withdrawals might take longer than usual because of the high volume. In its official statement about the recent halt, Binance.US was quite direct in criticizing the SEC and said:
The SEC has taken to using extremely aggressive and intimidating tactics in its pursuit of an ideological campaign against the American digital asset industry. Binance.US and our business partners have not been spared in the use of these tactics, which has created challenges for the banks with whom we work.
Further, it clarified that it has maintained 1:1 reserves for customer assets. As it works through the SEC case, it will continue to remain functional, albeit crypto-only. The crypto community has reacted strongly to the recent steps by the exchange following the lawsuit.
On June 5th and June 6th, the SEC consecutively filed charges against two largest exchanges- Binance.US and Coinbase for violating federal securities laws. The SEC has filed 13 charges against Binance.US, including unregistered offers and sales of the stablecoins – BNB and BUSD, its services namely the Simple Earn and BNB vault products, and its staking program.
Additionally, the regulator claims in its suit that Binance failed to register its online platform as an exchange or a broker-dealer clearing agency. Simultaneously, in the case of Coinbase, the SEC accused the firm of trading at least 13 crypto assets that are securities and were not registered. The SEC stated that these assets should have been registered with regulators before they were issued.
Notably, the SEC’s primary and common arguments in both the cases included the violation of securities laws and sale of unregistered securities. According to recent media coverage, the SEC has specified a total of 19 cryptocurrencies as securities in the recent lawsuits. It claims that these assets have qualified the Howey Test, which is used to determine whether an investment qualifies as a “security.” Here’s the full list of tokens named as securities by the SEC:
- In the lawsuit against Binance.US: Cosmos (ATOM), Binance Coin (BNB), Binance USD (BUSD) and COTI (COTI).
- In the lawsuit against Coinbase: Chiliz (CHZ), Near (NEAR), Flow (FLOW), Internet Computer (ICP), Voyager Token (VGX), Dash (DASH) and Nexo (NEXO).
- Common tokens in both the platforms: Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO) and Axie Infinity (AXS).
On Tuesday, the SEC also filed an emergency motion to freeze assets of Binance.US citing significant concerns. While the firm called this motion “unwarranted” and a move to enjoy an upper hand during the lawsuit hearing, it announced its decision to delist trading pairs and halt on USD services.
John E Deaton, Managing Partner of the Deaton Law Firm spoke about the SEC’s approach in a Twitter thread, stating that “the Coinbase and Binance lawsuits share some common themes and characteristics but, at the same time, are quite different.” He added that the SEC has an agenda and it was not acting in the best interests of retail crypto holders.
Further,he published a Google form to make sure users of the relevant platforms have their voices heard. In large, the rest of the crypto community has also been fairly harsh with the SEC with the influx of criticisms calling out the regulator as biased for his approach.