After suing Binance and CEO Changpeng Zhao for fraud, the US Securities and Exchange Commission (SEC) continues to sue the largest US cryptocurrency exchange Coinbase. For years, the crypto industry has argued that tokens cannot be considered securities and should not be regulated by the SEC. However, these lawsuits could completely change the cryptocurrency market.
According to Reuters, former federal prosecutor Kevin O’Brien said that the SEC is increasingly active in bringing cryptocurrencies into the jurisdiction of federal securities laws, if the SEC prevails in both cases, the industry will The cryptocurrency industry will have many changes.
In a lawsuit filed in Manhattan federal court, the SEC says Coinbase has made billions of dollars since 2019 by acting as a middleman in cryptocurrency transactions and evading disclosure requirements. information to protect investors. Coinbase traded at least 13 unregistered crypto products, including tokens like Solana, Cardano, and Polygon, the SEC revealed.
According to early estimates from data firm Nansen, $1.38 billion has flowed out of the Coinbase exchange as investors rushed to withdraw their funds. Shares of parent company Coinbase Global Inc (COIN.O) also fell $7.10. Coinbase Chief Legal Officer Paul Grewal said the company will continue to operate as usual and has demonstrated its commitment to compliance
In contrast to other assets, securities are tightly regulated and require detailed disclosure to inform investors of potential risks. The Securities Act of 1933 outlined the definition of the term “security,” but many experts rely on two U.S. Supreme Court cases to determine if an investment product is a security. bond or not. SEC Chairman Gary Gensler has long said that security tokens and tokens have gradually asserted their authority over the cryptocurrency market.
Although a few crypto companies are licensed as an alternative trading system, a type of trading platform used by brokers to trade listed securities, none of them work. as a comprehensive stock exchange. The SEC also sued Beaxy Digital and Bittrex Global for not registering as exchanges. Gary Gensler told CNBC that this whole business model is not compliant with US securities laws.
Cryptocurrency companies argue that the SEC’s regulations are vague and over-authoritative. However, many companies have stepped up compliance, halted products, and expanded overseas in response to the SEC sweep.
Kristin Smith, CEO of the trade group Blockchain Association, believes that the court will prove President Gensler wrong in due course.
On June 5, the SEC accused Binance of inflating trading volumes, manipulating customer funds, and deceiving investors about market controls. Binance denies many of the allegations in the SEC complaint. Binance founder Changpeng Zhao affirmed that investors’ assets are still safe and the platform will continue to operate normally. Besides, the world’s largest cryptocurrency exchange also announced that it will be ready to fight and protect the rights of itself and its investors.
On June 6, the SEC filed a motion to freeze assets belonging to Binance.US, the US subsidiary of Binance. Joshua Chu, chief risk officer at blockchain technology firm XBE, Collectibles, and Marvion said it is important to note that the SEC’s regulatory actions are aimed at ensuring companies operating in the cryptocurrency industry comply with the law. securities and protect investors. These events will make the crypto industry more stable and reliable, and even attract more investors
