Binance sued by the SEC: What it means for Australian users
We unpack what the charges against Binance in the USA means for investors in Australia
This morning the United States Securities and Exchange Commission (SEC) charged Binance and its founder, Changpeng Zhao (CZ), with 13 securities law violations.
The charges are broad in scope and include allegations of fraud, the illegal sale of securities, offering unlicensed investment products.
There is also an allegation that CZ himself moved user assets off Binance and into third-party companies – reminiscent of FTX and Sam-Bankman Fried (SBF).
What followed
Binance is the largest cryptocurrency exchange in the world, with trading volume that is frequently larger than that of all competitor exchanges combined.
Despite this, the market has had a fairly subdued response to the news.
At the time of writing, the overall market capitalization of cryptocurrencies is only down by 3.6%, 12 hours after the news first broke.
Bitcoin (BTC) is down 3.9%, Ethereum (ETH) 2.8% and Binance Coin (BNB) 11.1%.
Given the historic volatility of cryptocurrency markets, an overall decline of 3.9% is insignificant and could otherwise be mistaken for a normal day in crypto markets.
What it means for Binance Australia users
The short answer is; probably not much in the near term.
The SEC charges focus largely on Binance's US operations, and how the allegations affect US users. The SEC does not have jurisdiction in Australia.
However, it is still highly likely that lawmakers in Australia will be following the case closely, in case evidence reveals breaches of Australian laws or harm to Aussie users.
This could result in legal action against Binance Australia, or simply prompt Binance to change its product offering in Australia to help protect against potential regulatory blowback.
Should I get my funds off Binance Australia?
This is ultimately up to you.
When it comes to storing your crypto, best practices generally promote self-custody.
Self-custody refers to holding your crypto in a non-custodial wallet that only you own the private keys to.
You can read more about it in our dedicated guide.
Alternatively, you can move your assets to another exchange with similar coins and features to Binance.
Is this another FTX?
No, not currently.
Sam Bankman-Fried diverted user funds from FTX to his trading firm, Alameda Research. Alameda then gambled with these funds and lost them.
FTX then engaged in multi-billion dollar fraud in an attempt to hide the losses, before being caught out by none other than CZ, the founder of Binance.
Mind you, one of the SEC allegations against Binance is that CZ commingled user funds and and sent them to third-parties.
However, the SEC filing does not allege that these funds have been used in a fashion similar to FTX and Alameda.
Want to learn more?
You can read the full version of this article here.
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