Investigation Reveals Binance's Controversial Crypto Asset Securities Trading

FACTS

VIII. THE CRYPTO ASSETS TRADED ON THE BINANCE.COM PLATFORM AND BINANCE.US PLATFORM INCLUDE ASSETS THAT WERE OFFERED AND SOLD AS SECURITIES.

352. Since the Binance Platforms launched, Defendants have made available for trading on them crypto assets that are offered and sold as investment contracts, and thus as securities. This includes, but is not limited to, BNB, BUSD, and the units of each of the crypto asset securities further described below—with trading symbols SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI (collectively, the “Crypto Asset Securities”).

353. The crypto assets on the Binance Platforms, including but not limited to each of the Crypto Asset Securities, may be bought, sold, or traded for consideration including U.S. dollars, fiat currencies, or other crypto assets.

354. Each unit of a crypto asset on the Binance Platforms, including but not limited to each of the Crypto Asset Securities, trades at the same price as another unit of that asset.

355. These assets, including but not limited to each of the Crypto Asset Securities, are interchangeable (e.g., any SOL token or fraction thereof is just like any other). Accordingly, to the extent the assets change in price, all tokens of the same asset increase or decrease in price in the same amounts and to the same extent, such that one token is equal in value to any other one token, on a pro rata basis.

356. The purchase of any particular asset, including but not limited to each of the Crypto Asset Securities, does not appear to give an investor any special rights not available to any other investor in that asset, such as separately managed accounts or capital appreciation or returns, that are independent of the returns that may inure to other investors in the same asset.

357. The tokens on the Binance Platforms, including but not limited to each of the Crypto Asset Securities, are available for sale broadly to any person who creates an account with the Binance Platforms, regardless of whether that person treats it as anything other than as an investment. In other words, the Binance Platforms do not restrict crypto asset purchasers to those who might purchase the asset for any purported non-investment purpose. To the contrary, the “Trade” page displays changes in prices for the crypto assets similar to how properly registered national securities exchanges display information about securities to investors.

358. The Binance Platforms do not restrict how many units of a crypto asset, including but not limited each of the Crypto Asset Securities, any given investor may purchase. Moreover, investors are not required to purchase quantities tied to any purported non-investment “use,” if any, that may exist for the asset. To the contrary, investors may and typically do purchases these assets in any amounts.

359. The assets available for sale on the Binance Platforms, including but not limited each of the Crypto Asset Securities, are transferable and eligible for resale on the Binance Platforms or other crypto asset trading platforms without any apparent restrictions on resale.

360. The Binance Platforms have made available for trading crypto assets that have been the subject of prior SEC enforcement actions based upon their status as crypto asset securities, including but not limited to AMP (the AMP token), REP (the Augur token), UST (the TerraUSD token), and TRX (the token associated with the Tron network).

361. For purposes of prevailing on the Exchange Act claims set forth herein, the SEC need only establish that the Binance Platforms engaged in activities relating to a single crypto asset security. Nevertheless, set forth below are additional details regarding a non-exhaustive list of ten Crypto Asset Securities—in addition to BNB and BUSD, as described above—available on the Binance Platforms.

362. From the time of each of their first offer or sale, each of these Crypto Asset Securities was offered and sold as an investment contract and, therefore, was and is a security.

363. The Binance Platforms typically do not restrict any issuer of the Crypto Asset Securities (or of the other tokens available on the Binance Platforms) from offering, selling, or otherwise distributing their crypto assets (directly or through intermediaries such as underwriters, agents, and market makers) on the Binance Platforms and, in fact, the issuers of crypto assets have historically and today continue to offer, sell, or otherwise distribute their crypto asset securities on the Binance Platforms.