- The SEC Chairman claimed that crypto exchanges come under its authority as most tokens are securities
- Subsequently, Binance CEO addressed the SEC lawsuit to his employees in an email
The US Securities and Exchanges Commission (SEC) along with two prominent crypto entities has been in the spotlight ever since the regulator launched separate consecutive lawsuits. Earlier this week, the commission took action against Binance – the largest crypto exchange, and Coinbase – a leading American-based crypto exchange. The commission claimed that both the crypto entities have breached the securities laws.
Additionally, the commission asserted that Binance commingled customer funds while Coinbase commingled its businesses. The SEC also labeled a range of cryptocurrencies as securities in both lawsuits. Since then, Binance.US has moved to delist some of the listed tokens and its OTC trading platform. Meanwhile, Coinbase has continued to stand its ground and is prepared to go against the commission.
Binance CEO speaks about the lawsuit with employees
Binance CEO – Changpeng Zhao aka CZ’s email to his employees was leaked on 8 June. In it, he addressed the SEC lawsuit against him, the company, and its American arm – Binance.US. The CEO warned that the first thing the regulators would after is the chat logs of the company’s employees. He also asserted that these chats could one day show up in the courtroom or on the internet.
The warning came after the SEC quoted some of the chat logs between top executives of Binance. In the chats, the executives spoke about dumping BNB and the risks of holding it, and other regulatory-related matters. Zhao claimed these chats were “extremely damaging to our reputation (and theirs).” The CEO also highlighted that the company itself does not check the chat logs, further claiming it was the first for him as well. He concluded by saying,
“While we may still see other chat logs of disgruntled employees ranting, or other things we (or I) were not careful with saying in the past, they will also find that we continue to hold ourselves to a high ethical standard and, most importantly, we have always gone above and beyond to protect our users. On that, we will never compromise.”
SEC Chairman opines on the current status of the crypto market
In the latest development, SEC Chairman – Gary Gensler – claimed that a “vast majority of crypto tokens meet the investment contract test” aka the Howey Test. And, he added, because of this, crypto security issuers had to register or meet the exemptions during the Piper Sandler Global Exchange and FinTech Conference. Speaking about the current crypto market, he said, it was “Hucksters. Fraudsters. Scam artists. Ponzi schemes. The public left in line at the bankruptcy court.”
Gensler also opined on crypto leaders claiming a lack of clarity on the legality of business operations. He said, “They may have made a calculated economic decision to take the risk of enforcement as the cost of doing business.” The SEC chair further stated that “not liking the answer is not equivalent to a lack of clarity.”
