The SEC Goes to War With Crypto Exchanges Binance and Coinbase – The Average Joe

Newsletter

Latest Issues Subscribe

Company

About Us Jobs
×

Become a better investor with our free daily newsletters

Join 250,000+ investors discovering new market trends and ideas.

    The SEC Goes to War With Crypto Exchanges Binance and Coinbase

    victorlei

    June 6, 2023

    It’s only Wednesday, and the Securities and Exchange Commission (SEC) has launched a war on the two largest crypto exchanges — Binance and Coinbase (NASDAQ:COIN).

    Their weapon of choice: lawsuits.

    The casualties: $COIN falling nearly 20% in the past two days.

    Heart of the issue

    Binance: The SEC alleged that the company “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” including:

    • Commingling customer deposits: Separate entities owned by or related to Binance’s founder CZ had access to billions in customer funds.
    • Offering unregistered securities: Offered unregistered crypto tokens, including its own BNB token and BUSD stablecoin.

    Coinbase: The SEC alleged that the company is operating as an unregistered exchange and broker — and wants it to forgo “ill-gotten gains.” If Coinbase were to cease part of its US operations, analysts think that over 30% of its revenue could be at risk.

    Are your funds safu?

    Binance defended itself and said “the lawsuit is baseless” and would “vigorously” defend itself. Within 24 hours, investors withdrew nearly $800M from Binance after the charges — except that’s only a small fraction of its total deposits.

    For some, it brings back memories of FTX’s collapse — whose founder SBF was found to be diverting funds between the crypto exchange and his hedge fund Alameda Research. And we all know how that ended.

    Trending Posts