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The world’s biggest cryptocurrency exchange platform was accused of selling unregistered crypto securities in a lawsuit
Binance was accused of US securities law violation after selling cryptocurrencies allegedly claimed by prosecutors as unregistered securities. The prosecutors have purchased several cryptocurrencies from the online exchange platform Binance in 2017, which lost significant value too soon. The biggest cryptocurrency exchange is accused of failing to register as a broker-dealer or a security exchange with US regulators.
The lawsuit against Binance was filed in April 2020 in the US district court of Southern New York district under case no. 20–02803. Later a motion to dismiss the lawsuit accusing the exchange company was filed by Binance and CEO Chanpeng Zhao (CZ). On Thursday, 31st March 2022, US District Judge Andrew Carter dismissed a lawsuit against the cryptocurrency exchange.
The allegations complaint filers involved claimed the exchange engaged in millions of transactions wrongfully and failed to warn the prosecutor about possible and significant risks of cryptocurrency investments. The nine cryptocurrencies involved in lawsuit case filings are EOS, QSP, TRX, ICX, FUN, KNC, LEND, OMG and ELF, which the plaintiffs purchased using Binance’s online exchange. In the lawsuit, the prosecutors were looking to regain what they paid.
But the District Judge ruled out the case stating that the suing of Binance by prosecutors was too late, as more than a year had already passed between the filing of the lawsuit and the time of their digital assets purchasing.
On top of that, Judge Carter said that Binance is not applicable under the US securities law because the crypto exchange is not based in the US, no matter if it uses Amazon computers servers based in the country. He wrote that plaintiffs need more allegations than saying that prosecutors have bought cryptocurrencies. At the same time, Binance was located in the US, and that title either passed completely or in portions over the servers located in California that act as a host for the Binance website.
There were other cryptocurrency exchanges other than Binance that sued for selling unregistered crypto security recently. For instance, three Nasdaq listed crypto exchange users, Coinbase, filed a lawsuit against it, claiming that the exchange platform sold about 79 unregistered securities.
The United States Securities and Exchange Commission (SEC0 has not clearly stated which crypto assets are securities, although Gary Gensleres, SEC chairman, said on various occasions that those cryptocurrencies listed with 50 to 100 listings on exchanges are likely securities.
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