The recent legal actions in the United States against two of the largest crypto venues, Binance and Coinbase, have sent ripples throughout the crypto community. The Securities and Exchange Commission (SEC) Chief, Gary Gensler, has been adamant in his stance against digital currencies as his agency sues both exchanges for operating unregistered securities exchanges.
Gensler, in a recent interview with CNBC, asserted that the U.S. does not need more digital currency, as it already has the U.S. dollar serving as its digital unit of account. He argued that economies and the public haven’t required more than one way to move value throughout history. The SEC’s lawsuits against Binance and Coinbase focus on the provision of services such as brokerage and clearing on allegedly regulated securities.
In the midst of these legal battles, Gensler denies that his actions against the two companies have caused ambiguity over the legal position around cryptocurrencies. He further points to similarities between the case against Binance CEO Changpeng “CZ” Zhao and the criminal case against FTX founder Sam Bankman-Fried.
The SEC aims to prove that the numerous tokens traded on these crypto platforms resemble investment contracts that should have been registered with the agency, rather than merely being means of payment. Gensler stated that they only need to demonstrate one of these tokens as security to show that the exchanges should be properly registered.
While many in the crypto sphere have voiced concerns about uncertain enforcement and a lack of clarity, Gensler maintains that securities law has been clear for years. He insists that it is the responsibility of these intermediaries to comply with regulations, highlighting that Binance’s affiliate, Sigma Chain, has “boosted the volumes and corrupted the numbers because of the lack of controls.”
The ongoing SEC lawsuits do not allege fraud by Zhao, but instead seek civil penalties and a permanent ban on him acting as an officer or director of any securities issuer. This conflicts with the case of Bankman-Fried, who is awaiting trial on charges that include fraud, to which he has pleaded not guilty.
As the crypto industry continues to face regulatory scrutiny, these high-profile lawsuits could potentially shape the future of digital currencies in the U.S. and worldwide. The outcome of these cases may reveal key insights into the role that digital currencies will play and the requirements for operating within the bounds of regulatory frameworks.
Source: Coindesk
