Binance and CZ sued by the SEC

1ce51145 271a 4bf7 a0f3 6ac547eb5405

In the latest episode of The Market Report, analyst and writer Marcel Pechman discusses the impact of the United States Securities and Exchange Commission lawsuit against the Binance exchange.

Most likely, the U.S. population will be barred from using the international version of Binance, and those who opt for VPN services will be at risk of being prosecuted. Pechman believes Changpeng “CZ” Zhao and Binance will lose or strike a deal pleading guilty, pay a fine, and be forced to halt services for North American entities — including Paxos and the Binance USD (BUSD) stablecoin.

Considering Binance is the absolute leader in spot and derivatives trading, one might call the 5% price correction on April 5 a “vote of confidence,” meaning traders believe Binance international will remain fully operational. Worst-case scenario? A hefty fine, but operations will not be impacted, and every client will be made whole, similar to the BitMEX outcome.

As for the 10 tokens that the SEC claims to be securities, North Americans will not be blocked from buying or holding those altcoins, but it adds an extra step if they’re willing to trade them — for example, using a decentralized exchange.

Pechman believes the Coinbase lawsuit differs from Binance’s, as the U.S.-listed company has a huge base of North American clients and can’t move its operations abroad without a significant reduction in its user base and volumes. Moreover, Binance has other issues involved, such as the money transfers between related entities and the potential illicit use of client funds. 

So, the first read for Coinbase shows a much lighter case, very unlikely to become something more eventful, while Binance and CZ’s odds of facing the Department of Justice and criminal charges are way higher. 

Pechman highlights that if the U.S. Federal Reserve continues printing trillions of dollars to sustain the economy, investors will scramble to find scarce assets, so a crypto bull run will happen whether or not Coinbase and Binance are taking part in the process.

Lastly, the show discusses whether the Bitcoin price will retest the $24,000 level, considering the long/short ratio hit levels unseen in over 12 months. The show airs every Tuesday on the Cointelegraph Markets & Research YouTube channel.

Source link

SEC lawsuit against Binance and Coinbase unifies the crypto industry

Professionals from various parts of the crypto sector have responded to the United States Securities and Exchange Commission’s (SEC) recent actions against some of the biggest crypto exchanges, Binance and Coinbase. 

On June 5, the SEC filed a lawsuit against Binance for allegedly offering unregistered securities. Only a day after filing the Binance suit, the commission also went after Coinbase on somewhat similar grounds, alleging that popular cryptocurrencies offered by the exchange, like Solana (SOL), Polygon (MATIC) and The Sandbox (SAND), qualify as securities.

Cointelegraph reached out to various players working within the space to see their responses to the recent actions made by the SEC. From sharing their belief that it will drive crypto companies away from the U.S. to simply calling the SEC’s actions lazy, industry players shared their thoughts on the latest topic hounding the space.

An ‘unacceptable’ approach to regulation

According to Kristin Smith, the CEO of the Blockchain Association, while the SEC’s actions are expected, it’s still unacceptable. Smith explained that:

“The SEC doesn’t make the law. Indeed, this approach to regulation is unacceptable – but it is what we have come to expect from the SEC and its anti-crypto stance.”

In addition, the executive highlighted that while the industry and the U.S. Congress are working to develop effective regulation, the SEC “continues to distract from substantive policy efforts.” The executive believes that by listing assets in this way, the SEC is trying to circumvent formal rulemaking processes and denying public engagement.

Meanwhile, Paolo Ardoino, the chief technology officer of stablecoin issuer Tether believes that companies’ complaints against the SEC should be listened to. According to Ardoino, the uncertainty of rules and guidance in the U.S. is becoming a common theme, even among the biggest supporters of crypto in the country.

Turbos Finance CEO Ted Shao also echoed Smith’s sentiment. According to Shao, this is “not the direction Web3 developers want to see.” The executive believes that the SEC showed that it’s against the whole Web3 space as they are also coming after top projects and not just centralized exchanges (CEXs).

Driving crypto players abroad and weakening consumer confidence

In addition to the SEC’s actions being unacceptable, other professionals working in the space believe that the effects of this recent move include pushing crypto players to more crypto-friendly jurisdictions and weakening consumer confidence in crypto within the US.

Insider Intelligence crypto analyst Will Paige said that the recent suits highlight that the SEC intends to police the space through enforcement in the absence of a regulatory framework. According to Paige, this could potentially knock down the “already weak consumer confidence in cryptocurrencies” in the country.

e00228a7 257f 463e 895a e9164f42e728
Crypto ownership data from 2020-2023 and projection for 2024. Source: Insider Intelligence

Ben Caselin, the chief strategy officer at crypto exchange MaskEX, believes that while this is a case against Binance, it may have implications for other players in the US. The former AAX executive explained that this can “open up more opportunities for other jurisdictions such as Hong Kong, Dubai or even El Salvador to drive innovation and attract capital and talent.”

Oscar Franklin Tan, the chief legal officer of nonfungible token (NFT) protocol Enjin, agrees with the sentiment. According to Tan, the world will not wait for the US to make up its mind on crypto. Tan explained:

“The SEC actions only drive talent and innovation out of the US, to countries with clearer rules that support responsible builders. Singapore in 2020 stated it does not follow the US Howey Test. Japan has a clear self-regulatory framework for exchanges.”

The executive believes that “progressive countries” will reap the benefits, especially now that explosions in artificial intelligence and extended reality are highlighting the need for blockchain and genuine digital ownership.

Related: US Financial Services Committee sets date to discuss future of crypto

Doubts cast on SEC’s fairness and motivations

While others expressed their beliefs on the potential effect of the SEC’s lawsuit against Binance and Coinbase, other crypto professionals explored the motivation and fairness of the SEC’s move.

According to David Schwed, the chief operating officer of Blockchain security firm Halborn, the mandate of the SEC is to ensure the safeguarding of investors. Schwed believes that this can be done through clear regulations and not through enforcement actions. The executive added that SEC chair Gary Gensler’s motivations may be skewed. “It seems to me that his personal ambitions and the need to validate his stance have now superseded his core mandate,” he explained.

Alex Strześniewski, the founder of the decentralized finance (DeFi) protocol AngelBlock, described the SEC’s actions as “lazy.” The executive believes that it does not drive proper regulation forward. He explained:

“It’s like a school teacher berating you for giving the wrong answers but failing to give any explanation beyond that. I also don’t believe that the SEC does, in fact, have jurisdiction over everything they’re claiming to.”

Meanwhile, Tim Shan, the chief operating officer at decentralized exchange (DEX) Dexalot expressed mixed feelings about the lawsuits and said that the SEC’s actions are unfair to the community.

“They’ve provided very little clarity or guidance to the crypto community. They are regulating through the courts, which is really quite unfair and not the right way to regulate/govern,” he said.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?