Gary Gensler, head of the US Securities and Exchange Commission (SEC), is not just trying to protect investors. He aims to take down the cryptocurrency industry as a whole because he considers it… worthless.
He revealed his real motivation around cryptocurrencies in an interview with the CNBC television network yesterday: “We don’t need more digital currencies. We have digital currencies: the dollar, the euro, the yen. All of these are already digital.”
This time it is not a threat. The “bomb” has been dropped in order to protect the vested interests. After “warming up” with smaller cryptocurrencies and exchanges last time, the SEC decided this week to go on an all-out assault against two of the most prominent digital asset platforms.
It started by filing a lawsuit towards the largest exchange by trading volume, Binance and its CEO Changpeng Zhao (CZ) personally.
The SEC alleges that there were violations of the trading, securities, trading securities laws classified as derivatives.
The 13 in all charges even include an “extensive web of deception” as part of an elaborate scheme to evade US federal securities laws.
However, it not only accuses them of unfair practices in managing customer funds and lying to regulators, but also of trading securities on their platform that are classified as debt securities.
They believe, in other words, that almost all cryptocurrencies (clearly excluding Bitcoin and for now Ethereum) are subject to securities regulations. That is, that they operate illegally because they are not licensed by the SEC.
Yesterday the SEC went even further. In filing a motion in the U.S. District Court for the District of Columbia to issue a temporary restraining order against Binance and its affiliates.
What is it aimed at? To freeze their assets because, it argues, there is a risk that the defendants will seek to destroy, alter or conceal incriminating evidence, and to repatriate all of Binance’s U.S. assets located outside the country (note that Binance International is not affected by this move. The SEC does not have jurisdiction to go that deep).
Binance.US responded that until recently SEC officials had not expressed concerns about the safety of customer assets and that their company has been willing to work with authorities to resolve any outstanding issues.
In addition, they take the best possible care to safeguard client assets. “While we are disappointed by this action, we look forward to defending ourselves in court,” their statement concludes.
After Binance, the US Securities and Exchange Commission also sued Coinbase. The only exchange that is listed on Nasdaq, and therefore thoroughly vetted before getting listing approval. Coinbase is accused of violating the rules for trading securities.
The difference is that the lawsuit against Coinbase does not include accusations of mismanagement of funds and that it is not personally directed against its CEO, Brian Armstrong.
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