While the SEC’s Case Against Coinbase Has a Fatal Flaw, Binance US Will Require a Miracle To Escape the Regulator’s Clutches

SEC Binance Coinbase

The SEC has mounted a two-pronged attack against the crypto sphere by bombarding Binance and Coinbase with high-profile lawsuits. While the apex American financial regulator has likely caught Binance with its proverbial pants down, its case against Coinbase stands on quite flimsy legs.

For the benefit of those who might yet be unaware, the SEC filed 13 charges against Binance on Monday, accusing the world's largest crypto exchange of subverting established rules to allow high-net-worth individuals in the US to access Binance's offshore services, comingling of customer and corporate assets and funds, wash trading via affiliated entities, lack of KYC, and outright embezzlement on the part of Binance's CEO, Changpeng Zhao (CZ). Additionally, the apex financial regulator in the US has now declared some of the most popular tokens as "unregistered securities," thereby attempting to bring the entire crypto sphere under its own jurisdiction.

Then, on Tuesday, the SEC filed a separate lawsuit against Coinbase, accusing the crypto exchange of operating an "unregistered national securities exchange, broker, and clearing agency."

The SEC Files a Restraining Order Against Binance US

As an illustration of the SEC's confidence in the evidence that it has gathered against Binance, the regulator has just filed a restraining order against Binance, requesting the presiding judge to freeze the assets of Binance US.

Do note that the restraining order explicitly exempts customer withdrawals, lending credence to the thesis that this measure is squarely aimed against CZ and other Binance executives.

Nonetheless, Binance can still throw a wrench in this scheme by hiding behind KYC and AML protocols.

So far, there is only one major discrepancy in the SEC's case against Binance – the lack of a valid residential address of CZ and some of the other defendants. Nonetheless, this lacuna is not expected to derail the broader proceedings.

The SEC has Bungled its Efforts to Corner Coinbase

While Binance is likely to require a miracle to escape the SEC's clutches, Coinbase is another matter entirely.

As explained in the tweet above, the Sec Chair, Gary Gensler, had testified in Congress on the 06th of May, 2021, that the SEC did not have the authority to regulate crypto exchanges. Such a pivotal statement is unlikely to have been issued without a broad-based consensus at the SEC.

Coinbase's lawyers can drag Gensler and the SEC through the proverbial mud by highlighting the agency's internal correspondence that would have allowed the SEC Chair to make such a pivotal statement in Congress.

After all, which SEC Chair would invite the wrath of the US lawmakers by falsely claiming jurisdiction in a matter where none exists?

This is, therefore, as much a matter of the SEC's internal inconsistencies as it is of Coinbase's selling of unregistered securities.

Written by Rohail Saleem


Refference- https://wccftech.com

Post a Comment

0 Comments