The US Securities and Exchange Commission (SEC) shocked the market yesterday after accusing Binance and its founder Changpeng Zhao of violating federal securities law.
The SEC claims that the world’s largest exchange has facilitated trading in unregistered securities such as ADA, BNB, BUSD, MANA, SAND, FIL, COTI, AXS, ALGO, ATOM, MATIC, SOL.
However, the SEC did not include XRP in the list of assets labeled as “securities”. This decision surprised many as the SEC had previously argued that the coin was a security in its lawsuit against Ripple.
FirstlyThe SEC did not list XRP because the agency does not want to risk inconsistent decisions.
SecondlyXRP is already in litigation against Ripple. The mention of XRP as a security in the Binance lawsuit could create a potential detection problem.
Thirdif Ripple wins the ongoing legal battle, the ruling could weaken the agency’s position against Binance in the eyes of the public, press, and Congress.
It is worth noting that the SEC has already flagged XRP as a security in the ongoing Ripple lawsuit. In December 2020, the SEC said that Ripple and two of its executives had raised more than $1.3 billion through their sales of XRP, an asset the agency refers to as a security.
The meaning of the Ripple lawsuit
Notably, the outcome of the Ripple lawsuit will have a significant impact on the US cryptocurrency industry.
A positive outcome for Ripple could pave the way for regulatory clarity in the industry. However, if the company loses the lawsuit, industry leaders fear that the SEC could continue its adverse enforcement actions against cryptocurrency-related companies. The agency will also continue to label more altcoins as securities.
For SEC Chairman Gary Gensler All, other than bitcoins, is a security. Over time, the SEC and other regulators continue to publish the names of crypto assets that can be classified as securities.