SEC lawsuits against Binance and Coinbase unify the crypto industry

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Update (June 7, 12:05 PM UTC): This post has been updated with comments from BitMEX CEO Stephan Lutz.

Experts across the cryptocurrency sector reacted to recent actions by the U.S. Securities and Exchange Commission (SEC) against two major cryptocurrency exchanges, Binance and Coinbase.

On June 5, the SEC filed a lawsuit against Binance for allegedly providing unregistered securities. Just one day after filing a lawsuit against Binance, the commission went after Coinbase for similar reasons, citing popular cryptocurrencies offered by the exchange such as Solana (SOL), Polygon (MATIC) and The Sandbox (SAND). argued that the currency qualifies as a security.

Today, we indicted Binance Holdings Ltd.BAM Trading Services Inc., a US-based affiliate, jointly with Binance https://t.co/swcxioZKVPand its founder Changpeng Zhao committed various securities law violations.https://t.co/H1wgGgR5ir pic.twitter.com/IWTb7Et86H

— U.S. Securities and Exchange Commission (@SECGov) June 5, 2023

Cointelegraph reached out to market players active in this space to ask them to respond to recent actions by the SEC. Industry insiders shared their thoughts on the latest developments, from sharing the idea that cryptocurrency companies will stay away from the US to simply calling the SEC’s actions lazy.

An “unacceptable” approach to regulation

According to Blockchain Association CEO Christine Smith, the SEC’s actions, while expected, remain unacceptable. Mr Smith explained:

“The SEC does not make laws. Certainly such a regulatory approach is unacceptable, but this is what we expect from the SEC and its anti-crypto stance.”

The executive stressed that while industry and Congress are working to develop effective regulations, the SEC “continues to turn a blind eye to substantive policy efforts.” By listing assets in this manner, the executive believes the SEC is trying to sidestep the formal rulemaking process and deny public involvement.

Meanwhile, Paolo Ardoino, chief technology officer of stablecoin issuer Tether, believes corporate complaints to the SEC should be heeded. According to Ardoino, uncertainty over rules and guidelines in the United States is becoming a common theme among the country’s biggest crypto supporters.

Turbos Finance CEO Ted Xiao echoed Smith’s sentiment. According to Shao, this is “not the direction Web3 developers want.” The executive believes it shows that the SEC is against the Web3 space as a whole, as the SEC is targeting top projects as well as centralized exchanges.

Outflow of cryptocurrency players overseas and declining consumer confidence

In addition to the SEC’s actions being unacceptable, other experts working in the field say the impact of this recent move could include pushing crypto players into more crypto-friendly jurisdictions and increasing the number of domestic investors in the United States. We believe that this includes weakening consumer confidence in cryptocurrencies.

Will Page, a cryptocurrency analyst at Insider Intelligence, said the recent lawsuit highlights the SEC’s intent to crack down on the field through enforcement in the absence of a regulatory framework. According to Page, this could destroy “already weakened consumer confidence in cryptocurrencies” in the country.

Ben Caselin, Chief Strategy Officer of crypto exchange MaskEX, believes that while this is a lawsuit against Binance, it could also affect other players in the US. A former AAX executive explained that this “could open up further opportunities to drive innovation and attract capital and talent to other jurisdictions such as Hong Kong, Dubai and even El Salvador.”

Oscar Franklin Tan, chief legal officer of non-fungible token protocol Enjin, agrees. According to Tan, the world is not going to wait for the U.S. to make a decision on cryptocurrencies. Tan explained:

“The SEC action will only drain talent and innovation from the US to countries with clear rules to support responsible builders. There is a clear self-regulatory framework for

The executive believes “progressive countries” will reap the benefits, especially now that the explosive development of artificial intelligence and augmented reality has highlighted the need for blockchain and true digital ownership. .

Related: U.S. Financial Services Commission Sets Date to Discuss Future of Cryptocurrencies

SEC’s impartiality and motives are called into question

While some expressed belief in the potential impact of the SEC’s lawsuit against Binance and Coinbase, other cryptocurrency pundits explored the motives and fairness of the SEC’s move.

The SEC’s mission is to ensure investor protection, according to David Shwed, chief operating officer of blockchain security firm Halborn. Schwed believes this can be achieved through clear regulation rather than enforcement. The executive added that SEC Chairman Gary Gensler’s motives may be skewed. “It seems to me that his personal ambitions and need to justify his position have now been superseded by his core mission,” he explained.

Alex Strześniewski, founder of decentralized financial protocol AngelBlock, called the SEC’s actions “lazy.” The chief executive believes this does not encourage proper regulation. he explained:

“It’s like your schoolteacher berating you for giving a wrong answer and failing to explain further. And actually the SEC has jurisdiction over everything they claim.” I do not believe that I have

Meanwhile, Tim Shan, chief operating officer of decentralized exchange Dexalot, expressed mixed feelings about the lawsuit, saying the SEC’s actions were unfair to the community.

“They provide little clarity or guidance to the cryptocurrency community. They regulate through courts, which is really unfair and not the right way to regulate/govern,” he said. rice field.

Impact on crypto stocks and altcoins prices

Stefan Lutz, CEO of crypto trading platform BitMEX, shared an insight into the potential impact of the SEC crackdown on exchanges in the market. Lutz said there will be downward pressure on crypto stocks, altcoin prices and valuations of U.S.-based crypto startups in the short term. Lutz explained:

“Investors are more likely to keep their money in cryptocurrencies, but are less likely to invest in bitcoin because bitcoin is less likely to be considered a security or stablecoin due to its correlation with fiat currency. expensive.”

In the medium to long term, Lutz believes exchanges will be more cautious when trading with U.S.-based customers and providing access to what the SEC claims are securities. The executive also expressed frustration that regulators are “bringing the issue of security definition back to court” instead of offering clearer guidelines.

BitMEX has had particular trouble with US regulators. In 2021, the trading platform agreed to pay up to $100 million to settle lawsuits with the Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN). In 2022, a New York court ordered the BitMEX founder to pay $30 million in civil penalties.

magazine: Crypto Regulation: Does SEC Chairman Gary Gensler Have the Final Decision?