Binance.US, the US arm of cryptocurrency exchange Binance, has suspended trading of several crypto pairs and reduced the number of supported trading pairs converted following a lawsuit filed by the US Securities and Exchange Commission (SEC) against Binance entities and their leadership. The move is seen as a precautionary measure to address potential securities concerns raised by the SEC.
The move came after the SEC filed a lawsuit against Binance on June 5, accusing the exchange of offering unregistered securities. The fees include unregistered offers and sales of BNB and BUSD tokens, as well as various products and programs offered by Binance. Similarly, Coinbase, another popular cryptocurrency exchange, was also targeted by the SEC in a separate lawsuit for offering securities in the form of certain cryptocurrencies such as SOL, MATIC, and The Sandbox.
Binance.US has announced that it will be removing select advanced trading pairs on June 8, 2023 and has also paused its Over-The-Counter (OTC) trading portal. More than 90 trading pairs of the stablecoin Tether (USDT), eight Bitcoin (BTC) pairs, and two Binance USD (BUSD) pairs are affected by this suspension. However, deposits and withdrawals remain available on the platform.
A Tether spokesperson suggested that the decision to halt trading of non-USDT tokens could be a preemptive move given the possibility that these exchange-listed tokens could be considered securities by the SEC.
In addition, Binance.US has reduced the number of supported convert trading pairs and limited options for buying, selling and converting only a limited number of cryptocurrencies, including USDT, USD Coin (USDC), BNB, Ether (ETH), BTC and others. The exchange has also updated the maximum trade amount for these options to $10,000.
In addition, Binance.US has temporarily closed its OTC trading platform, but no information is available on when it will resume operations.
Binance’s efforts to improve the transparency of its reserves have recently exposed red flags in the crypto exchange’s finances. The Wall Street Journal recently ran an article stating that Binance is trying to calm investors, but that the finances remain a mystery.
According to a former member of the Financial Accounting Standards Board (FASB) and asset manager, a report from accounting firm Mazars did not clarify the matter. It said there was no information regarding the quality of internal controls and how Binance’s systems liquidate assets to cover margin lending.
The report also noted a lack of information about Binance’s corporate structure. It mentioned that Binance’s chief strategy officer, Patrick Hillmann, was unable to name Binance’s parent company. Binance has been going through a corporate reorganization for almost two years now.
Both Binance and Coinbase are now facing regulatory challenges and the outcomes of these lawsuits could have significant implications for the crypto industry.
Mona el isa, formerly of Goldman Sachs, and founder of Avantgarde, one of the world’s first institutional DeFi companies, has commented on the lack of transparency and evidence of reserves in centralized crypto companies like Binance. She points out that these companies fail to provide meaningful evidence of their asset custody practices, which require implicit trust from users. According to El Isa, if there was more transparency regarding custody, the market would be able to better differentiate between good and bad practices, enabling effective monitoring and mitigating potential problems.
El Isa argues that decentralized, transparent on-chain funds, commonly found in decentralized finance (DeFi), could be more secure than opaque centralized finance funds (CeFi). DeFi offers auditable transparency 24/7, making trust unnecessary. This position aligns with her drive to establish herself Enzyme, which she co-founded. Enzyme is a platform designed to automate traditional wealth management and make it more transparent, aiming to create an asset management experience that empowers users through non-custodial interactions, on-chain reporting for transparency, and enforceable and automatable risk management within decentralized governance frameworks.