 |
| Why CFTC's Lawsuit Against Binance is Not Just About Commodities? |
CFTC files a lawsuit against Binance alleging illegal commodity trading, failure to register with regulators despite providing services to US citizens, and lax customer registration standards required to prevent money laundering. The indictment also mentions issues that do not directly implicate charges but still contain serious criminal elements. Therefore, it is worth examining the indictment in detail because it may contain materials that may lead to other regulators filing lawsuits in the future. Additionally, whether ETH will be indirectly subject to a ban in a possible lawsuit that the SEC is expected to file against Coinbase may also become evident as a result of this lawsuit. Finally, we will examine this issue.
Firstly, all Binance companies except Binance US, CZ and CZ-affiliated companies and Samuel Lim are among the accused. Lim was Binance's legal compliance officer from 2018 to 2022. Therefore, he managed the relationship with regulators and the strategy. He is also identified as an accomplice in this indictment.
Binance US is not directly or indirectly included in the official indictment, although it is said to be under the management of CZ and Binance. This shows that the US does not yet have sufficient evidence. Evidence had emerged that Binance US was not an independent entity during the Silvergate bankruptcy process.
Let's start with the most important part: CFTC states that BTC-ETH-LTC-USDT-BUSD are commodities in the indictment. All services provided by Binance on these tokens, including spot-futures-options, were found to be illegal because they were not registered with the CFTC. The first allegation, illegal commodity trading, is based on this.
SEC also acknowledged that BTC and ETH were commodities. However, after Ethereum transitioned to PoS infrastructure, securities definitions began to be made. In fact, the New York regulator had officially defined ETH as a security in a formal document. CFTC's commodity definition in a current lawsuit file has turned disagreements between regulators from mere words to a legal problem.
Especially, if SEC has a plan to direct an accusation on ETH staking in a possible lawsuit against Coinbase, CFTC may have disrupted these plans. Therefore, although this lawsuit against Binance is bad for the exchange, it may have positive results for Coinbase and Ethereum's future in the US.
Similarly, although BUSD was recently declared a security, CFTC states that it is a commodity. There is no possibility that CFTC does not know the recent security ruling. Therefore, an intentional duality is created here. I interpret this statement as the last point of competition between CFTC and SEC. If such a duality occurs, everyone accused will work to reduce SEC's arguments by running to the CFTC.
While the SEC has already earned the ire of the entire cryptocurrency market, CFTC Chairman Behnam has taken the opposite side by supporting both US exchanges and cryptocurrencies. In conclusion, this indictment may have far-reaching effects for the US crypto market and its future regulatory landscape.
