The U.S. Securities and Exchange Commission (SEC) has filed a complaint against cryptocurrency exchange Binance, accusing the company of violating federal securities laws.

The SEC alleges that Binance, the world’s largest cryptocurrency exchange platform, unlawfully solicited U.S. investors to trade crypto asset securities on its platforms, Binance.com and Binance.US. Per the complaint, Binance engaged in unregistered offers and sales of securities and made false representations to investors regarding surveillance and controls over manipulative trading.

According to the SEC’s claim, Binance and its subsidiary, BAM Trading, operated as an exchange, broker-dealer and clearing agency without registering with the SEC. The commission also alleges that Binance conducted unregistered offers and sales of its own cryptocurrency assets, as well as profit-generating programs and investment schemes. Specifically, the charges focus on the BNB and BUSD cryptocurrencies launched by Binance, as well as the BNB Vault and Simple Earn programs, “and a so-called ‘staking’ investment scheme available on the Binance.US Platform.” The defendants are accused of depriving investors of material information about these securities and programs.

Furthermore, the complaint states that Binance and BAM Trading made misrepresentations about the controls implemented on the Binance.US platform, raising significant amounts of money from private investors. The SEC asserts that Binance evaded U.S. laws and regulation by implementing a plan to surreptitiously escape registration requirements. “As Zhao himself acknowledged—Binance did not want to ‘be held accountable’ for these actions,” the filed charges explain. “As the Binance CCO explained, ‘[o]n the surface we cannot be seen to have US users[,] but in reality, we should get them through other creative means.’”

In a response to the SEC’s complaint, Binance expressed disappointment and emphasized its active cooperation with the SEC’s investigations. Binance stated that it had engaged in extensive discussions to reach a settlement but that the SEC chose to act unilaterally. The company said it intends to vigorously defend its platform and criticized the SEC’s enforcement approach, calling for more clarity and guidance for the digital asset industry. Binance also refuted allegations that user assets on the Binance.US platform were at risk, assuring customers of the safety and security of their funds.

The SEC seeks various remedies and resolutions, including a permanent injunction, disgorgement of ill-gotten gains, civil money penalties and equitable relief. 

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Russian lawmakers intend to soon approve four bills designed to regulate various aspects of cryptocurrencies, a high-ranking member of the Russian parliament announced. Meanwhile, Russian companies are already using digital assets in cross-border settlements, the official noted.

Russian Legislature to Vote on Crypto Laws by End of July

The State Duma, the lower house of the Russian parliament, plans to adopt four crypto-related laws during its spring session which ends on July 30, according to Anatoly Aksakov, chairman of the parliamentary Financial Market Committee.

The bills are tailored to regulate cryptocurrency mining, cross-border crypto payments, taxation of digital assets, and liability for their illegal use, the lawmaker detailed, quoted by the Interfax news agency. He emphasized that the draft laws are well thought through.

Aksakov remarked that large Russian companies are already actively using cryptocurrency in foreign trade settlements, but they want to see legislation outlining the legal framework for such transactions. Speaking at the St. Petersburg International Legal Forum, he stated:

Now we have come to the point where four bills are in the stage of practical adoption … It is quite possible that we will adopt all the laws in the spring session.

Anatoly Aksakov also said that the authorities want to take into account the opinions of market participants regarding tax rules. “Most likely, the norms applicable to DFAs will be taken into account as much as possible here, since this is a similar instrument,” he elaborated.

The law “On Digital Financial Assets” (DFAs), which went into force in January 2021, covers only some crypto-related activities, in particular those that involve digital assets with an issuing entity, like tokenized traditional assets or utility tokens, for example.

At the same time, transactions with decentralized cryptocurrencies like bitcoin are yet to be comprehensively regulated in Russia. Pressed by Western sanctions over Moscow’s invasion of Ukraine, Russian authorities have stepped up their efforts in this direction.

Do you think Russia will regulate crypto transactions by the end of July? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.