Gary’s Final Strike on Crypto Before Departure
Gary Gensler will resign as SEC Chairman on January 20, 2025. But before leaving, he delivered one final blow to the crypto world. Under his watch, the U.S. Securities and Exchange Commission (SEC) filed an 81-page document against Binance. It opposed Binance’s motion to dismiss the lawsuit, calling Binance Coin (BNB) and ten other tokens securities. Let’s break down what this means for Binance and the broader crypto market.
SEC Targets: Eleven Cryptocurrencies
The SEC is not happy to target just Binance Coin. In addition to BNB, it marks 10 other tokens as securities: Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA ), Algorand (ALGO), Axie Infinity (AXS) and COTI.
But the document does more than just name the tokens. The SEC accused Binance of not just selling them. It claims that Binance facilitates the secondary market for these tokens. Why is this important? Because it allegedly encourages investors to view these tokens as profit opportunities.
Ripple’s partial victory earlier this year also influenced the SEC’s argument. The case ruled that secondary sales of XRP were not securities. So now, the SEC is taking extra care to close those gaps.
How Binance Was Called
The SEC’s case is based on what’s known as the Howey Test. Simply put, this test requires three conditions to determine whether something is a security:
- Has the money been invested?
- Is there a common goal?
- Do people expect to profit from other people’s work?
The SEC said Binance met all three conditions. It claimed that Binance tied the token value to the growth of its ecosystem to make users think they were investing.
In addition, the SEC considers secondary market transactions to be securities. Binance says otherwise, but this document directly challenges that.
Ethereum and Bitcoin: Why are they surviving?
Not everyone agrees with the SEC’s approach. Coinbase legal chief Paul Grewal denounced what he saw as selective enforcement. In a tweet, he asked why the two largest cryptocurrencies, Ethereum (ETH) and Bitcoin (BTC), are always left out.
It’s a fair question. ETH and BTC dominate the market. However, they could find no trace of it in the document. Ripple’s case may have influenced the SEC’s strategy, but critics are still scratching their heads.
What this means for cryptocurrencies
If the SEC prevails, the consequences could be huge. Tokens marked as securities may disappear from platforms like Binance. Developers and investors will face stricter rules that could slow innovation and growth.
The SEC’s goal is clear: control the cryptocurrency market. By targeting token sales and secondary trading, it seeks to set strict legal standards.
What’s next?
The filing is not new litigation. The U.S. Securities and Exchange Commission doubled down on its charges against Binance. But what about excluding Ethereum and Bitcoin? This raises serious questions about fairness.
As Gensler prepares to leave, this feels like his last big move. When it comes to cryptocurrencies, the risks are huge. The court’s decision will either bring clarity or upend the market.
