US declares war on Wild West crypto: Binance and Coinbase exchanges aim for big action
The crypto world plunged deeper into crisis yesterday as US regulators targeted two of the world’s largest exchanges.
In a move that sent shockwaves through the industry, the Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase over allegations that the trading platform was operating illegally in the country.
The case against Coinbase came just a day after the SEC charged Binance and its boss with “an extensive web of deception” and “calculated evasion” of US laws.
The two companies together account for about half of the global trade in digital assets such as bitcoin.
The cases represent a growing crackdown on the crypto industry, which SEC Chairman Gary Gensler has labeled a “Wild West” for investment.
Allegations: The US Securities and Exchange Commission has filed a lawsuit against crypto exchange Coinbase over allegations that the trading platform was operating illegally in the country
For Coinbase, the SEC claims its bosses were “fully aware” that its company was subject to securities laws, including registration as a broker and exchange, but decided to ignore it.
“Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine SEC scrutiny,” Mr. Gensler said.
The Wall Street regulator has also launched an attack on the world’s largest crypto currency exchange, Binance.
On Monday, the SEC sued the company and its founder Changpeng Zhao, accusing it of mishandling client funds, ramping up trading volume on the site and taking steps to circumvent US regulations.
The complaint alleges that Binance secretly co-mingled and sent “billions of dollars” of customer assets to a third party, Merit Peak Limited, which is owned by Zhao.
Gensler outlined 13 civil charges and said, “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.”
The regulator accused Zhao of wanting to enrich himself with little regard for his investors.
“We argue that Zhao and the Binance entities not only knew the rules of the road, but also deliberately chose to circumvent them and endanger their clients and investors – all in an effort to maximize their own profits,” Gurbir Grewal said. , director of the SEC’s enforcement division.
Regulators are on red alert after a series of high-profile collapses wiped out more than a trillion dollars from crypto’s market cap last year.
The collapse of FTX in November was the biggest of these failures, sparking a cryptocurrency rout and causing billions of dollars to be lost to an estimated million creditors.
Arrest: Disgraced FTX founder and chief exec Sam Bankman-Fried (pictured) faces 13 charges, including fraud and money laundering, as well as foreign bribery
Disgraced FTX founder and CEO Sam Bankman-Fried faces 13 charges, including fraud and money laundering, as well as foreign bribery.
He has denied all allegations against him and is under house arrest at his parents’ California home until his trial later this year. Analysts have said the crypto world is still feeling a hangover from the FTX drama.
“The robust language used by the SEC, along with the long list of indictments, suggests that this latest fiasco to flood the crypto market will continue for some time to come,” said Laith Khalaf, chief investment analysis at AJ Bell.
“Right now, it feels like the crypto bubble has a thousand punctures.”
Commenting on the news of the lawsuit against Binance, boss Zhao wrote on Twitter: “Our team stands ready to ensure systems are stable, including withdrawals and deposits. We will provide a response as soon as we see the complaint. I haven’t seen it yet.’
He claimed that Binance’s “size and global brand awareness” meant that it has become “an easy target that is now in the middle of a US regulatory tug-of-war.”
Binance has more than 100 million customers around the world and its founder accused the SEC of filing the lawsuit to “get the headlines.”
Paul Grewal, Coinbase’s Chief Legal Officer, said: “The SEC’s reliance on an enforcement-only approach, in the absence of clear rules governing the digital asset industry, is hurting America’s economic competitiveness and companies like Coinbase. who have a proven commitment to compliance. The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation.
“In the meantime, we’ll just carry on with our business.”