SEC indicts cryptocurrency firms Binance, Coinbase over infractions

*The United States’ Securities and Exchange Commission has filed charges against cryptocurrency heavyweights Binance and Coinbase over allegations of operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight, as well as unregistered offer and sale of securities

* We are disappointed…will defend our platform vigorously, Binance reacts to allegations

Alexander Davis | ConsumerConnect

The United States (US) Securities and Exchange Commission (SEC) has filed charges against cryptocurrency heavyweights Binance and Coinbase amid an apparent crackdown on cryptocurrency in the American country.

The market regulatory Commission has filed 13 charges against Binance Holdings, which operates the largest crypto asset trading platform in the world – Binance.com – along with US-based affiliate BAM Trading Services (which together with Binance operates the crypto asset trading platform Binance.US) and Binance’s founder Changpeng Zhao.

The allegations include “operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities,” FinTech Futures report said.

The development reportedly followed the US Commodity Futures Trading Commission (CFTC) filing a lawsuit against Binance and Changpeng Zhao back in March.

Gary Gensler, Chairman of SEC, commented on the development, saying, “through 13 charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.

“As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied.”

The SEC Chief also stated: “They attempted to evade US securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value US customers on their platforms.”

Binance reacts to flurry of regulator’s allegations

However, in a blog post, Binance says it is “disappointed” in the regulator’s move, and the Financial Technology (FinTech) company intends to “defend our platform vigorously.”

It said: “From the start, we have actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns.

“Today’s (Friday, June 9) action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology.”

The crypto exchange further noted, that it will “continue to cooperate with regulators and policymakers in the US and across the globe because that is the right thing to do.

“We will work alongside industry partners to defend this important technology from misguided lawsuits.”

Coinbase also facing changes

Cryptocurrency exchange Coinbase also, has been charged by the SEC for allegedly “operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency” and for “failing to register the offer and sale of its crypto asset staking-as-a-service program”.

The SEC also purported  that Coinbase had made “billions of dollars” by “unlawfully facilitating” the buying and selling of crypto asset securities since 2019.

Gurbir Grewal, Director of the SEC’s Division of Enforcement, explained: “As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them.

“While Coinbase’s calculated decisions may have allowed it to earn billions, it’s done so at the expense of investors by depriving them of the protections to which they are entitled. Today’s action seeks to hold Coinbase accountable for its choices.”

SEC taking regulation enforcement approach harming America: Coinbase CEO

In a tweet, Coinbase CEO Brian Armstrong said: “Instead of publishing a clear rule book, the SEC has taken a regulation by enforcement approach that is harming America.

“So, if we need to avail ourselves of the courts to get clarity, so be it.

“Btw, in case it’s not obvious, the Coinbase suit is very different from others out there – the complaint filed against us is exclusively focused on what is or is not a security. And we are confident in our facts and the law.”

Armstrong added: “We’ll get the job done. In the meantime, let’s all keep moving forward and building as an industry. America will get this right in the end.”

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