06/08 update below. This post was originally published on June 7
BitcoinBTC, ethereum and other major cryptocurrencies BNBBNB and XRPXRP have been left reeling by a devastating one-two punch by the U.S. Securities and Exchange Commission (SEC) this week.
Subscribe now to Forbes’ CryptoAsset & Blockchain Advisor and successfully navigate the bitcoin and crypto market rollercoaster
The bitcoin price has swung wildly this week as the SEC launched legal action against first crypto exchange Binance and then U.S.-based rival Coinbase—just after Congress introduced a potentially game-changing crypto bill.
Now, a U.S. judge has ordered the SEC to respond within seven days to a 2022 petition made by Coinbase, asking the regulator to provide “regulatory clarity” around how existing securities laws might apply to bitcoin, etheruem and other cryptocurrencies.
It’s at the beginning of a bull run you need up-to-date information the most! Sign up now for the free CryptoCodex—A daily newsletter for traders, investors and the crypto-curious that will keep you ahead of the market
The United States Court of Appeals for the Third Circuit has ordered the SEC to explain if it intends to decline Coinbase’s request, the reasons for such a decision, or a timeline of when it expects to come to a conclusion, it was reported by Coindesk.
“Rules of the road, from legislation or rulemaking or both, must come before enforcement actions. That is why we petitioned the SEC for rulemaking nearly a year ago in the first place,” Paul Grewal, chief legal officer at Coinbase, posted to Twitter.
“We continue to believe that the SEC could not be proceeding with litigation against our industry, like the case filed against us today, if the SEC had not already decided to deny our petition for rulemaking.”
Update 06/08: The U.S. Securities and Exchange Commission’s (SEC) barrage against the crypto industry has continued, with the SEC alleging in a new court document that the chief executive of crypto exchange Binance, Changpeng “CZ” Zhao, and his close associate, Binance back office and financial manager, Guangying Chen, funneled billions of customer funds to CZ’s offshore trading company Merit Peak via a holding company called Key Vision Development Limited.
In its 13 charges, the SEC claims CZ and Binance used Merit Peak and Sigma Chain, another of CZ’s trading companies, to commingle corporate funds with client assets to use “as they please.” “The SEC has been unable to determine why a Zhao-controlled entity that was purportedly trading on the Binance.US Platform using CZ’s personal funds would have acted as a ‘pass through’ account for billions of dollars of Binance Platforms customers’ funds,” the court filing reads, going on to allege bank statements show $12 billion was sent to CZ and $162 million to a Guangying Chen-controlled company in Singapore.
In April, Coinbase filed the legal challenge in an attempt to force the SEC’s hand and claiming the current requirements are poorly suited for bitcoin, cryptocurrencies and digital assets such as non-fungible tokens (NFTs).
“If the SEC’s answer to our petition for rulemaking is ‘no,’ then they are required by law to tell us, because we have the legal right to question that ‘no’ in court. And there are serious questions to be asked,” Grewal added.
Sign up now for CryptoCodex—A free, daily newsletter for the crypto-curious
This week, Coinbase, along with its rival Binance, were hit with SEC lawsuits, both being sued for violating U.S. securities laws. The SEC complained that Coinbase and Binance had both failed to register as a securities exchanges and branded many of the cryptocurrencies available for trading on the two exchanges as securities.
SEC chair Gary Gensler has defended the regulator’s approach, criticized by some in the crypto community as “regulation by enforcement.”
“The investing public has the benefit of U.S. securities laws,” Gensler told CNBC. “Crypto should be no different, and these platforms, these intermediaries need to come into compliance.”
Follow me on Twitter.
