The US Securities and Exchange Commission (SEC) appears to be gearing up for enforcement action against the world’s largest crypto exchange, Binance. However, it remains uncertain whether Binance or Binance.US is the main target. After taking on crypto exchanges Coinbase, Bittrex, Kraken, and other related entities, the securities regulator now seems to have set its sights on action against Binance or Binance.US.
Binance has faced increased scrutiny, particularly after the collapse of FTX. In March, the US CFTC filed an enforcement action against Binance and CEO Changpeng “CZ” Zhao for violating commodities laws and operating an illegal derivatives exchange. Additionally, the Department of Justice (DOJ) is investigating Binance over several matters, including potential violations of sanctions against Russia.
The SEC may soon take action against either Binance.US or Binance based on a recent tweet by an anonymous source, Andrew. Along with this, Binance CEO “CZ” could also face charges for violating securities laws and noncompliance with anti-money laundering (AML) regulations. Furthermore, it has been suggested that the US Department of Justice (DOJ) may become involved in the investigations following the SEC’s enforcement actions.
Recently, the SEC sent a Wells notice to Coinbase, warning them of potential enforcement action over the listing of securities and staking services. Coinbase has responded to the notice, arguing that the SEC’s action will not impact them as they do not list securities. They have also criticized the SEC for its lack of clarity over digital asset regulations. Coinbase has filed a complaint seeking a response from the SEC, which has been ordered by a court to provide an answer within 10 days. Coinbase will then have the opportunity to reply to the commission’s response within seven days of filing.
In light of the potential enforcement action, Binance has decided to pause BTC withdrawals. This decision is attributed to congestion on the Bitcoin blockchain, causing a spike in pending transactions and fees. To manage the current situation, Binance has moved almost $5 billion worth of BTC, revealing that these outflows are movements between Binance hot and cold wallets due to BTC address adjustments. The SEC might consider this point in its action against Binance.
The actions taken by the SEC and other regulatory bodies in relation to digital asset regulations have sparked disagreement within the crypto community. While they highlight the importance of complying with regulations to maintain a stable and secure industry, they’ve also frustrated some for not providing clear guidelines and rules for crypto trading, listing, and staking. As the crypto market continues to evolve, finding the right balance between regulatory oversight and fostering innovation will be a delicate, ongoing process.