“You have video footage of the chair of the SEC, as a professor at MIT, saying 75% of these digital assets are commodities,” he told CNBC. Chief executive Brad Garlinghouse has argued that Gensler himself has issued contradictory statements about digital assets. The company is aggressively fighting the suit – it expects to have spent $200m on its defense.
Photograph: Yuki Iwamura/AFP/Getty Images Sam Bankman-Fried, the former chief execuitve of FTX. The regulator alleges Ripple illegally raised almost $1.4bn by selling XRP in violation of investor-protection rules. In 2020, the SEC sued the tech payment and exchange company Ripple, contending that its XRP token is a security. “You don’t have to call it a security to do that.”īut the SEC is involved in a lawsuit that may decide whether it has jurisdiction over crypto. “Federal agencies always seek to expand their scope of jurisdiction, so obviously the SEC would like to call these things securities, and going after the exchanges is one way to stake out their claim,” says Charles Elson, chair in corporate governance at the University of Delaware. The SEC’s moves against Coinbase and Binance do not address whether cryptocurrencies are securities or commodities, a debate that has caused confusion for regulators and meant that for years regulation of the digital token business has fallen between the two stools of the SEC and the Commodity Futures Trading Commission (CFTC). In a statement, Gensler said Binance and its chief executive, Changpeng Zhao, had “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law”.īinance issued a statement saying that it will “vigorously defend itself” in the case against the SEC. The 136-page complaint accuses the company of avoiding rules by letting Americans improperly open accounts and trade.
The lawsuit against Binance, the world’s largest token exchange, takes a different approach. “Why should the New York stock exchange or broker-dealers we all know and respect be undermined by this other corner of the capital markets, which is sort of saying, thumbing their nose and saying, ‘Catch us if you can’,” he said. In an interview with Bloomberg, Gensler depicted the crackdown as an effort to protect investors and the integrity of US securities markets. By declaring Coinbase an illegal exchange, the SEC chief makes it harder for US crypto traders to trade digital tokens. Gensler has repeatedly argued that most tokens fall under SEC oversight, and has warned government-regulated banks to steer clear. The second claimed that the biggest US crypto platform Coinbase of running an illegal exchange.Ī 101-page lawsuit filed in federal court in New York on Tuesday alleges Coinbase skirted SEC rules for years by letting users trade crypto tokens that were actually unregistered securities. The first accused industry giant Binance of a range of securities violations, including mishandling customer funds and misleading investors and regulators. The effort to establish clarity came in the form of back-to-back lawsuits. This week, Gary Gensler, a longtime critic of crypto and the chair of the US Securities and Exchange Commission (SEC), appears to have found the answer – by launching a crackdown on crypto exchanges, the platforms on which investors buy and sell digital currencies.
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