The Mauritian Solution To The US SEC Saga Around Crypto Exchanges

In June 2023, the U.S. Securities and Exchange Commission (SEC) filed charges against both Binance and Coinbase for operating as unregistered securities exchanges. Binance and Coinbase are two of the world's largest crypto exchanges¹. The SEC alleges that Coinbase traded at least 13 crypto assets that are securities and should have therefore been registered with the SEC. Binance has been charged with the same offence for offering 12 crypto assets that, according to the SEC, constitute securities.

This lawsuit brings into perspective the assertion by the SEC that crypto assets, which are also referred to as virtual currencies, digital/virtual assets or digital/virtual tokens, constitute securities. The SEC has regulatory authority over the issuance and sale of securities in the U.S. Although the purport of this article is not to delve into the law regulating 'securities' in the U.S., it is nevertheless important to understand what constitutes 'security' under U.S.