SEC Expands Its Binance Lawsuit, Classifying Tokens Like Axie Infinity as Securities

Binance faces new SEC allegations of trading unregistered securities without proper registration. Critics argue SEC's expanded legal action appears inconsistent, confusing, and lacks clear regulations.

The U.S. Securities and Exchange Commission (SEC) has expanded its lawsuit against Binance, classifying several tokens, including Axie Infinity Shards, Filecoin, Cosmos’ ATOM, Sandbox, and Decentraland, as securities.

This move comes after the SEC recently stated that other major tokens, such as Solana and Cardano, are not classified as securities.

In the expanded lawsuit, the SEC alleges that Binance and its U.S. partner, BAM Trading, engaged in the trading of these newly identified securities without proper registration.

The SEC claims that Binance’s platforms were filled with promotional material from token creators and promoters, presenting these tokens as promising investment opportunities.

According to the SEC, Binance’s actions contributed to the creation of a market where these tokens were falsely depicted as safe investments.

Moreover, the SEC's updated complaint now alleges that Binance operated as an illegal exchange, broker-dealer, and clearing agency, engaging in the trading of securities without the necessary registrations.

The SEC also claims that Binance failed to adequately inform users about the risks and legal status of the tokens traded on its platforms in the U.S. and globally.

This broader legal action has sparked criticism, with many arguing that the SEC's approach resembles a "witch hunt" rather than a genuine effort to establish clear regulations.

Critics maintain that the SEC's handling of the case is confusing and inconsistent, failing to provide the crypto industry with a clear regulatory path.

Meanwhile, Ripple chief legal officer Stuart Alderoty has highlighted inconsistencies in the SEC's position, specifically calling out the term "crypto asset security" as a fabricated concept.

At the same time, Paul Grewal, Coinbase’s chief legal officer, has expressed concerns about the SEC's ability to handle the complexities of the cryptocurrency market, pointing out the regulator's contradictory statements and unorganized approach, which he believes are damaging the industry.

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