One of the biggest news stories in the world of cryptocurrency took a significant turn yesterday. The U.S. Securities and Exchange Commission (SEC) has charged Binance, the world's leading cryptocurrency exchange, with selling unregistered securities. The charge includes not only Binance Coin (BNB) and stablecoin BUSD, but also coins like Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), and Axie Infinity (AXS).
The SEC has categorized all these as 'Crypto Asset Securities' (CAS), implying that Binance has been trading unregistered securities since its launch. This charge resonates with SEC Chairman Gary Gensler's recent remarks, stating his intent to treat all coins except Bitcoin as securities.
Interestingly, Gensler was known to have praised blockchain as a 'great technology' in a lecture back in 2019. This makes the SEC's current action appear backed by some unknown 'power'.
The crypto market underwent drastic changes following this news. The top 10 coins all dropped in price, with 93 out of the top 100 experiencing a decline. Bitcoin's price also decreased by 6.25%, while the coins mentioned in the lawsuit, like BNB and Solana, saw roughly a 10% drop. Traders reportedly withdrew digital assets worth approximately $322 million from Binance and deposited an additional $91 million.
The Ethereum market also seems to be facing profit-taking, as Ethereum loses its vitality with Gensler's clear stance to categorize all coins as securities, excluding Bitcoin.
However, among the varied reactions to these developments, the most noteworthy is from Binance's CEO, Changpeng Zhao. Despite Binance US maintaining a good relationship with the SEC for nearly two and a half years, Zhao criticized the SEC for attempting to attack the cryptocurrency industry, just as they did with Coinbase and Gemini.
Zhao argues that the SEC's lawsuit cannot be justified, asserting that the committee's actions harm investors, suppress innovation, and adversely affect the cryptocurrency industry and businesses. Ironically, Zhao, who had a role in triggering FTX's downfall, now finds himself under similar assault. An old Korean proverb, "There's no one without a speck of dust when shaken," seems fitting here, indicating that no one is safe once an investigation begins.
The biggest concern in this situation is the potential ripple effects Binance's downfall could have on the cryptocurrency market. Given Binance's position as the undisputed leader among crypto exchanges, its downfall could greatly shake the entire cryptocurrency market, intensifying uncertainties.
Not just this lawsuit, but the cryptocurrency market in general is highly volatile. Therefore, when investing, careful consideration is necessary, and one should be prepared to take responsibility for their decisions.
If you are only trading in domestic exchanges, it's relatively safe. However, if you have concentrated all your assets in Binance, it might be a good idea to distribute them to different exchanges in advance. Even FTX disappeared in less than a week; no exchange is entirely safe. Still, at this point, diversifying your investments among exchanges holding a lot of margin could serve as a safety
