Current Events > SEC Filing Suit Against Largest Crypto

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https://www.politico.com/news/2023/06/05/sec-sues-binance-crypto-exchange-00100196

"The SEC filed more than a dozen charges against Binance and CEO Changpeng Zhao on Monday stemming from what the agency called the companys blatant disregard for U.S. law as it grew into the worlds largest cryptocurrency exchange. In a 136-page complaint, the Wall Street regulator alleged that Binance, its American affiliate, Binance U.S., and Zhao have been operating unregistered U.S. financial institutions, misleading investors about the companies risk controls, inflating trading volumes and mixing billions of dollars of investor assets and sending them to a third-party entity owned by Zhao."

The case was filed in the U.S. District Court for the District of Columbia. Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law, SEC Chair Gary Gensler said in a statement.

Since the fall of FTX seven months ago, the SEC has orchestrated a sweeping crackdown on the $1 trillion crypto market. But the Binance case represents Genslers biggest salvo to date, with the agency taking a broad swing against the exchange and its high-profile CEO. At one point in the complaint, the SEC alleges that customer money was at Binances and Zhaos mercy. Binance denied the SECs allegations in a blog post, including the claim that customer assets at Binance.US were at risk. The company said it was disheartened by the SECs decision to bring the case to court after the two sides had been engaged in talks about a settlement.

While we take the SECs allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis, the company wrote in the post. We intend to defend our platform vigorously. The SECs charges further complicate an already murky outlook for Binance in Washington. U.S. authorities have been circling for months, and in March the Commodity Futures Trading Commission sued Binance over a series of similar charges resulting from the exchanges operations in the U.S."

Crypto companies continue to get into trouble.

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Good. These companies that hold peoples money need to be regulated more.

Fuck crypto so hard. They should just make this shit illegal.

They should file suits against everything crypto related just to crash it

The entire industry is a scam from top to bottom. From concept to application. Every primary party, every middleman, everything.

Been a long time coming anyways. Pretty sure most of the top shelf crypto distributors are gonna get hit with a big ban hammer as time goes on. Big cases like this should set some precedences that will speed things up

This has little to do with crypto itself and everything to do about scumbag people in charge of an exchange.

Binance failing will be a sight to behold.

It has everything to do with crypto.

legendary_zell posted...

The entire industry is a scam from top to bottom. From concept to application. Every primary party, every middleman, everything.

this

so what does this mean for my chances of becoming a crypto billionaire?

whitelytning posted...

This has little to do with crypto itself and everything to do about scumbag people in charge of an exchange.

It's not like they flipped a coin to decide whether to open a smoothie shop or a crypto exchange. There's a reason so many scumbag people have gotten into the crypto business.

[LFAQs-redacted-quote]

Being fair or not does not mean it isn't 100% true.

I think it's been made abundantly clear that having your money on an exchange is a very unwise move. Mostly because the people at the top think it's their money.

Anony1125 posted...

so what does this mean for my chances of becoming a crypto billionaire?

Pretty near nil unless you strike gold on a meme coin taking off. You're FAR more likely though to be rug pulled and lose all your money.

Changpeng Zhao lives in Dubai, which is a city in the United Arab Emirates.

The United Arab Emirates has no extradition treaty with the United States of America.

At this point Cyrpto companies would be smart and not be located in the US.

name_unknown posted...

At this point Cyrpto companies would be smart and not be located in the US.

More so they want to not be in the developed world sans maybe China. Too many consumer protection laws getting in the way of the grift.

[LFAQs-redacted-quote]

You do not view yourself as having scammed anyone.*

And the blockchain may be the core behind what makes crypto work, but it would be like saying that water is what made the tulip craze work: at best you are being dense to make your point.

whitelytning posted...

Good. These companies that hold peoples money need to be regulated more.

Nah. People point to no government regulation is a reason to own crypto. Let them see the fallout of what they think they want.

[LFAQs-redacted-quote]

Because it legally cannot be defined as something else. Otherwise it will be breaking some law as a requirement for running it.

https://www.politico.com/news/2023/06/06/sec-coinbase-securities-law-violations-00100352

"The SEC on Tuesday sued Coinbase, the largest crypto trading platform in the U.S., setting up a head-on battle that could be a pivotal moment for the future of the $1 trillion digital asset market.
A day after filing more than a dozen charges against Binance, the worlds largest cryptocurrency exchange, the SEC alleged that Coinbase has been illegally running a national securities exchange, broker and clearing agency, among other charges. The lawsuit was filed in the U.S. District Court for the Southern District of New York.

You simply cant ignore the rules because you dont like them or because youd prefer different ones, SEC Enforcement Director Gurbir Grewal said in a statement. The consequences for the investing public are far too great.

Coinbase is also being sued. CEOs using their crypto company as a personal piggy bank finally catching up to them.

Good.

Regulation is good though, right cryptobros?

can't speak on binance since i'm not familiar with its practices. coinbase, conversely, has been pretty diligent about regulatory compliance and frequently voiced its frustration about a lack of cooperation or clarity from the SEC.

whitelytning posted...

Good. These companies that hold peoples money need to be regulated more.

meanwhile at the well-regulated and fdic-ensured regional banks earlier this year...

CoyoteTheGreat posted...

Fuck crypto so hard. They should just make this shit illegal.

over the course of the past 35 years we've effectively gone from it being illegal to export such technologies overseas, to driving its development overseas.

legendary_zell posted...

The entire industry is a scam from top to bottom. From concept to application. Every primary party, every middleman, everything.

now that's just an outright disingenuous thing to say.

UnsteadyOwl posted...

It's not like they flipped a coin to decide whether to open a smoothie shop or a crypto exchange. There's a reason so many scumbag people have gotten into the crypto business.

the only difference between crypto and wall street is that the former builds in public and has a lower barrier to entry, and some nominal notion of the latter being "regulated" despite it continuing to go belly-up cyclically due to underhanded practices. money handling has a way of attracting scumbags - be it crypto, finance, government, insurance, etc.

name_unknown posted...

At this point Cyrpto companies would be smart and not be located in the US.

seems to be the move among more cautious players. a former classmate cofounded a private venture fund with a former exchange owner - both founders american - and as a rule, they don't invest in american companies.

[LFAQs-redacted-quote]

with all due respect, you can't convince these people. i've worked on projects with no financial incentive at any level, and more recently on technologies that don't explicitly require peddling a token to function and still been accused of complicity in "crypto scamming."

i'd add that crypto's more than an evolution of the ledger. working in nizkp, there's a revolution ongoing in large-scale trustless computation and data. it's also theoretically extensible to traditional companies, enabling public auditability without exposing sensitive data, without any need for exposure to blockchains or cryptocurrency, though blockchains are a nice-to-have as a tamper-proof public record of state and state changes.

AldousIsDead posted...

Regulation is good though, right cryptobros?

for exchanges, which are traditional business entities, yes insofar as they're clearly defined, which from what i can gather is the ongoing complaint in the sector. onchain though, very difficult to enforce.

[LFAQs-redacted-quote]


So you got in on the ponzi scheme before most people and cashed out.

You didn't "scam" anyone but someone else lost everything when you got rid of the hot potato.

ellis123 posted...

More so they want to not be in the developed world sans maybe China. Too many consumer protection laws getting in the way of the grift.

The existing consumer protection laws they complain about will have to be strengthened to bring about the mass adoption they crave so much.

TheMikh posted...

the only difference between crypto and wall street is that the former builds in public and has a lower barrier to entry, and some nominal notion of the latter being "regulated" despite it continuing to go belly-up cyclically due to underhanded practices. money handling has a way of attracting scumbags - be it crypto, finance, government, insurance, etc.

Whatabout, whatabout, whatabout. You can list a thousand problems with the traditional banking system and I will probably agree with you on a lot of them but that system being bad does not automatically make any alternative system good.

Crypto has a lot of the same wall street scumminess but based around digital tokens that we're calling currencies and therefore nominally valuable but have never demonstrated that they can function well as currencies and I would argue would function worse than fiat currency in any kind of mass adoption scenario.

https://www.politico.com/news/2023/06/06/bidens-crypto-cop-taunts-republicans-00100412

The new House GOP bill drafted by leaders of the Financial Services and Agriculture Committees wouldnt eliminate the SECs role in the market but would impose firmer guardrails on the agency in a bid to give crypto startups a clear pathway to government regulation. In doing so, the bill would give the CFTC a significant new say over a sizable chunk of the industry. Its a legal arrangement custom-fit for crypto that companies like Coinbase have long sought."

"Its designed to make sure the SEC cant police this market, Rep. Brad Sherman of California, a senior member of the Financial Services Committee, said. What [crypto executives] want is phony regulation. They want a patina of regulation.

Before the suits were filed house GOP was as always for deregulation and little oversight.

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