At the beginning of June 2023, the US Securities and Exchange Commission charged Binance Holdings Ltd, which operates the largest crypto asset trading platform in the world, as well as its founder, Changpeng Zhao, with a variety of securities law violations. The legal battle between the SEC and Binance is still ongoing at the time of writing, but the two entities are working together to reach a consensus that would avoid a total Binance asset freeze.
In essence, the deal aims to protect billions of dollars in customer funds without shutting the exchange down while the SEC’s lawsuit proceeds. The news was revealed during a hearing in Washington presided by US District Judge Amy Berman Jackson, who expressed that if a deal is struck, she would no longer need to rule on the SEC’s request for a temporary restraining order.
During the hearing, the Judge expressed doubt about the SEC’s effectiveness to regulate the crypto world, describing the commission’s efforts as inefficient and cumbersome. The SEC also targeted another cryptocurrency exchange, Coinbase, shortly after filing the Binance lawsuit.
According to straitstimes.com, similar actions against smaller cryptocurrency exchanges ended up in paid fines or the discontinuation of certain products. However, the move against Binance has the potential to drive the exchange out of the US entirely.
As previously mentioned, the SEC also turned its attention to Coinbase by charging the crypto exchange with operating illegally in the US. Specifically, the SEC believes that Coinbase operated as a broker, exchange and clearing agency for investments without properly registering. All of the aforementioned services are subject to SEC rules, but because Coinbase failed to register, the SEC said it managed to escape oversight, including checks against conflicts of interest.
Authorities in the US believe that crypto assets operate just like other investments that are subject to oversight, and they are trying to police the cryptocurrency industry in a more aggressive manner as a result. This increased scrutiny is also partially justified by the high-profile collapse of cryptocurrency exchange FTX, which took the entire industry by storm by filing for bankruptcy protection in November 2022.
Coinbase officials cited by bcc.com argued that there’s a need for clear legislation in the crypto space, which should be developed transparently and applied equally. They also pointed out that litigation is not a solution and revealed that Coinbase will be operating as usual for the time being.
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