The US Securities and Exchange Commission (SEC) is tightening its grip on the crypto industry with two recent lawsuits filed against major exchanges, Binance and Coinbase. The lawsuits allege that the exchanges have violated securities law by offering unregistered securities to investors and operating as unregistered securities brokers.

The SEC’s lawsuit against Binance alleges that the exchange operated an unregistered trading entity and misdirected investors’ funds. As a result, Binance has experienced $719 million in outflows from the crypto exchange across all protocols and a net outflow of $230 million during US trading hours. The SEC’s complaint also alleges that several tokens, including Binance’s BNB token, Solana, Cardano, and Polygon, qualify as securities. This has led to declines in their values during Asia trading hours, with Metaverse tokens SAND and MANA experiencing declines of 13% and 11.6%, respectively.

Similarly, the SEC has filed a lawsuit against Coinbase, accusing it of acting as an unregistered broker and offering unregistered securities. The lawsuit alleges that several tokens offered by Coinbase, including Solana, Cardano, Polygon, and Filecoin, qualify as securities. The lawsuit also claims that Coinbase has been operating as an unregistered security broker since 2019. This comes after Coinbase was previously fighting the SEC over its staking program, which the SEC claims is an investment contract and therefore a security.

The SEC’s crackdown on Binance and Coinbase highlights the need for greater regulatory oversight in the crypto industry. As investors continue to pour money into cryptocurrencies, it is important that exchanges operate within the bounds of securities law and provide investors with transparency and protection. While the lawsuits against Binance and Coinbase are still ongoing, they serve as a warning to other exchanges to ensure that they are in compliance with securities law and mitigate risks for their users.

In summary, the SEC’s lawsuits against Binance and Coinbase highlight the importance of regulatory oversight in the crypto industry. As the industry grows and evolves, exchanges must ensure that they operate within the bounds of securities law and provide investors with transparency and protection. The lawsuits serve as a warning to other exchanges to take proactive measures to mitigate risks and comply with securities law.