The U.S. Securities and Exchange Commission (SEC) has filed complaints against cryptocurrency companies Coinbase Inc. and Binance Holdings Ltd. for several alleged securities law violations.
The SEC filed a complaint on June 6 in U.S. District Court for the Southern District of New York against Coinbase for allegedly “operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency,” according to its press release. Coinbase also was charged for not registering “the offer and sale of its crypto asset staking-as-a-service program,” the release reports.
The SEC had filed a complaint on June 5 in the U.S. District Court for the District of Columbia against Binance, “which operates the largest crypto asset trading platform in the world,” and its founder Changpeng Zhao, the SEC reports in a press release on the complaint. Alleged violations include operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities," the release reports
Gurbir Grewal, director of the SEC’s Division of Enforcement, said in the June 6 release that Coinbase was aware of federal securities laws “but deliberately refused to follow them.”
“You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” Grewal said in the release.
A June 6 article in Forbes called the charges against Coinbase and Binance “a thunderous blow to the cryptocurrency world,” as the SEC is determined to protect investors.
“The fallout from these charges has left the entire crypto community reeling, with investors questioning the integrity and safety of their digital investments,” the Forbes article states. “For years, crypto investors placed their faith in these platforms, believing they provided a safe haven in the volatile world of digital assets. However, the SEC's charges expose a reality where profits often took precedence over investor protection. These allegations rip away the illusion of security, leaving investors vulnerable to potential fraud, manipulation, and conflicts of interest.”
Binance in a blog post stated that “We intend to defend our platform vigorously.”
“All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary,” the blog states. “Rather, the SEC’s actions here appear to be in service of an effort to rush to claim jurisdictional ground from other regulators – and investors do not appear to be the SEC’s priority. Because of our size and global name recognition, Binance is an easy target now caught in the middle of a U.S. regulatory tug-of-war.”
Coinbase, in a March 22 blog, said, “We are very confident in the way we run our business – the same business we presented to the SEC in order for us to become a public company in 2021.”
“We continue to think rulemaking and legislation are better tools for defining the law for our industry than enforcement action,” the blog said. “But if necessary, we welcome the opportunity for Coinbase and the broader crypto community to get clarity in court.”
