DiversyFund is a FinTech company that publishes DiversyFund Lawsuit, a blog tracking litigation in the financial industry. More notably, DiversyFund is a platform providing everyday investors access to the wealth-building tools traditionally only available to the 1%. In the following article, DiversyFund Lawsuit reviews the charges of Coinbase and Bitcoin and why the SEC is cracking down on cryptocurrency exchanges.
Binance and Coinbase, two well-known names in the fintech sector, have found themselves in sticky waters as the United States Securities and Exchange Commission (SEC) has brought charges pertaining to operating unregistered exchanges (among others) against them. As of early June 2023, the SEC issued multiple press releases publicly explaining the charges, giving weight to the fact that the country is certainly becoming one of the globe's strictest crypto regulators.
Compounded by the cries of Wall Street and Washington, tighter enforcement has been on the brink since
FTX's collapse. And it appears these recent charges may cement SEC's authority over this specific fintech niche and ignite crypto firms' overseas searches.
DiversyFund on How Changpeng Zhao and Binance Entities Were First to Come Under Fire
Binance Holdings Ltd. (commonly known as Binance) operates the world's biggest crypto asset trading platform, Binance.com. The company, alongside BAM Trading Services Inc., which co-runs the trading platform, and its founder, Changpeng Zhao, have been charged with 13 securities law violations by the SEC.
June 5, 2023, saw the entities receive blow upon blow, including charges like operating unregistered exchanges, clearing agencies, and broker-dealers, the unregistered sale of securities, and misrepresenting trading controls.
DiversyFund reviews that among many allegations, the SEC said that despite Binance and Zhao saying US customers couldn't transact on Binance.com, the company and founder were actually subverting controls, allowing high-value American customers to keep trading.
On top of that, the Commission alleged that Zhao and Binance have control over customers' assets, letting them mix investors' assets and/or divert them however they see fit. Such diversions purportedly led to an entity (Sigma Chain) owned by Zhao himself.
DiversyFund Lawsuit notes that upon suing the exchange, the SEC's goal is to bar founder Changpeng Zhao from the country's securities market entirely.
SEC's Move Against Coinbase Came Just a Day Later
The following day, June 6, 2023, the US Securities and Exchange Commission (SEC) charged Coinbase with operating a crypto trading platform without registering as a national broker, securities exchange, and clearing agency. "Failing to register the offer and sale of a crypto asset staking program" came as a second charge against the company.
DiversyFund reviews that the SEC's allegation states that since 2019 (at least), the incorporation has made exorbitant amounts of money by unlawfully enabling the buy-and-sell process of crypto securities. The Commission claims that Coinbase mixes traditional roles of brokers, clearing agencies, and exchanges without registering such acts with the SEC, as written in law.
By failing to register, SEC purports that Coinbase has deprived customers of much-needed productions, recordkeeping necessities, and safeguarding.
As per the complaint, Coinbase Global Inc., DiversyFund Lawsuit notes that Coinbase's holding company, is also liable for a selection of the exchange's violations.
Life After the SEC's Charges: The Future of Crypto in the United States of America
Naturally, these high-profile charges have rocked the industry, with many wondering where cryptocurrency buying and selling will fit into the nation's regulated economy. Such intense enforcement is a turnkey moment in digital currency's history — an industry that only appeared to garner mainstream acceptance a year ago.
DiversyFund reviews that crypto began as a
decentralized finance system with an antigovernment ethos, operating beyond the confines of regulators' walls. However, 2021's market surge rolled around companies constructed a lobbying apparatus in Washington, seeking to rebrand as a compliant happy-to-work-with-the-government entity.
But since Coinbase's and Binance's charges brought by the SEC, the same companies are now eager to flee the United States of America. In fact, Nic Carter, Castle Island Ventures co-founder, says it's the number one thing that industry startups are talking/thinking about.
From Hong Kong to Dubai to the Caymans to Bermuda to London, it appears the US will no longer be a haven for crypto investors as time continues ticking. Ultimately, this will make it harder for Americans to experiment with new industry products and trade digital currencies.
However, not all companies want to relocate. Firms specializing in Bitcoin mining appear to prefer the cheap power afforded by the US. And, according to The New York Times, companies fleeing from the nation will remain fighting for more
favorable industry regulations in Washington.
DiversyFund explains that a massive exodus from the country isn't likely to come in the near future. But experts understand it's the generally agreed direction in the long-term.
