Crypto Crackdown: Coinbase and Binance Lawsuits Shake Markets
The S.E.C. accuses Coinbase of operating as an unregistered broker.
The S.E.C. said Coinbase made billions of dollars facilitating the sale of crypto assets as an unregistered exchange and deprived investors of significant protections. The agency has argued that most crypto products are no different from stocks, bonds and other securities, and that companies offering them must register with the agency and make accompanying disclosures, like any traditional exchange or brokerage.
Coinbase and the S.E.C. have been in a long public battle over the agency’s stance on digital assets. Last year, Coinbase petitioned the S.E.C. for new rules, and in April it sued the agency for failing to act on that petition.
The company has been lobbying Congress and calling for legislation. Coinbase’s chief legal officer, Paul Grewal, testified before the House Agriculture Committee on Tuesday about a draft bill released last week that he said would make the rules “clear in practice, not just theory.” Mr. Grewal added, “The solution is legislation, not litigation.”
Binance is under fire for about a dozen securities charges.
Binance is accused of funneling billions of dollars of customer money to a company owned separately by Mr. Zhao. The S.E.C. charged Mr. Zhao as well as the company, and accused Binance of about a dozen other violations, including misleading investors about the adequacy of its systems to detect and control manipulative trading.
In addition to those charges Binance, like Coinbase, is accused of operating an unregulated exchange and issuing crypto currencies that the agency said should have been registered as securities. Among them was its own token, which trades as BNB, as well as about 10 other popular tokens. Binance denies the charges. On Tuesday, the S.E.C. asked a federal court for a temporary order freezing Binance’s U.S. assets.
Source: The New York Times
