Tag: Securities and Exchange Commission

SEC Sues Crypto Exchange Binance, CEO Changpeng Zhao

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By Nikhilesh De. June 5, 2023. (CoinDesk).

The U.S. Securities and Exchange Commission sued crypto exchange Binance, the operating company for Binance.US and Binance founder and CEO Changpeng “CZ” Zhao on allegations of violating federal securities laws on Monday.

Binance, Binance.US and CZ offered unregistered securities to the general public in the form of the BNB token and Binance-linked BUSD stablecoin, said the suit, which also alleges that Binance’s staking service violated securities law. There are similar charges against BAM Trading – the operating company for Binance.US – and Binance itself, including failure to register as a clearing agency, failure to register as a broker and failure to register as an exchange. The SEC also alleged that Binance allowed for commingling of customer funds, that CZ was “secretly” controlling Binance.US and that a CZ-owned and operated entity was inflating Binance.US’sding volume.

The suit also alleged multiple times that Binance allowed U.S. persons (meaning U.S. citizens or people living in the U.S.) to trade on its platform, despite saying it wasn’t.

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Crypto’s ‘trial of the century’: Ripple case could be decided over just a few words from former SEC official

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Following 16 months of intense pre-trial litigation, countless hours in court and over 600,000 documents reviewed by both sides, the case that’s being billed as “the cryptocurrency trial of the century” could all come down to one speech made by a former Securities and Exchange Commission official four years ago.

That case, of course, is the lawsuit brought in late 2020 by the SEC against payment settlement company, Ripple. The SEC says Ripple violated securities laws when it failed to register with the agency sales of its native cryptocurrency token, XRP, that helped finance its platform and facilitate payments on Ripple’s network.

At the heart of the commission’s case is a contention that XRP was being sold by Ripple and its top executives as an illegal and unregistered security. The commission is seeking billions of dollars in damages.

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The Crypto Security Debate Goes to Court

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By Paul Kiernan. May 26, 2022. (Wall Street Journal)

WASHINGTON—Investors are asking the courts to decide an existential question for the cryptocurrency industry: whether digital tokens are, for legal purposes, more similar to stocks or to gold.

Attorneys for cryptocurrency-trading platform Coinbase Global Inc. COIN 9.47% filed a motion this month to dismiss a class-action lawsuit arguing that 79 of the tokens listed on the firm’s platform are unregistered securities. 

The group of Coinbase users is demanding reimbursement for trading fees and market losses and seeking to prevent the assets from continuing to trade on the platform. 

Outside of enforcement actions, the Securities and Exchange Commission hasn’t indicated which cryptocurrencies it considers to be securities. But federal statutes passed in the 1930s deputize ordinary investors to help the SEC do its job, by giving buyers of unregistered securities the right to sue the seller for their money back. 

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SEC Can’t Shield Ex-Official’s Speech Drafts, Ripple Says

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By Elise Hansen. May 16, 2022. (Law360)

The U.S. Securities and Exchange Commission can’t use attorney-client privilege to shield early drafts of former official Bill Hinman’s speech about cryptocurrencies, since Hinman gave the speech in his personal capacity, Ripple Labs told a New York federal court.

Attorney-client privilege doesn’t cover communications about Hinman’s personal remarks, and Hinman can’t be considered a “client” of the SEC’s attorneys for activities outside his official duties, Ripple and its executives argued Friday.

The letter was the latest shot in the discovery battle between the SEC and Ripple after the agency accused the blockchain-based payments company and its executives of violating federal securities laws in their sales of Ripple’s signature digital asset, XRP.

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Cryptocurrency Firms Push Back Against Proposal to Police Treasury Markets

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By Paul Kiernan. April 27, 2022. (Wall Street Journal)

WASHINGTON—A Securities and Exchange Commission proposal intended to make Treasury markets more resilient has sparked a backlash from cryptocurrency companies, which say it could increase legal risks for so-called decentralized finance, or DeFi, platforms.

The rule, proposed by the SEC in January, would expand the agency’s definition of an exchange to include a broader array of communication systems that enable prospective buyers and sellers of securities to find each other. Such entities would have to register with the SEC either as exchanges akin to the New York Stock Exchange, or as a category of broker-dealers called alternative trading systems, or ATSs, which perform exchange-like functions but face lighter regulations.

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Concerns rise over crypto regulation as Congress members disclose holdings

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By Akayla Gardner and Bloomberg. April 26, 2022. (Fortune)

As efforts to regulate the rapidly-growing cryptocurrency market increase, some observers are raising concern about the rising number of U.S. lawmakers beginning to dabble in digital assets.

Current members of Congress bought and sold an estimated $1.8 million worth of crypto-related investments since the beginning of 2021, according to an analysis conducted by data provider 2iQ Research. The amount is based on the midpoint of dollar ranges reported by lawmakers in public disclosures.

The findings come amid a broader backlash against members of Congress being able to trade securities while in office. In the case of crypto, the debate is taking place as the Securities and Exchange Commission and the Commodity Futures Trading Commission are still staking out their roles in regulating the asset class. The tug-of-war puts committees like Senate Banking and Agriculture, which oversee the SEC and CFTC, in a position to address crypto-regulation policy.

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