SEC lawsuits against Binance and Coinbase unify the crypto industry

June 7, 2023 admin Cryptocurrency News 0

Professionals across the crypto sector have responded to the United States Securities and Exchange Commission’s (SEC) recent actions against two of the biggest crypto exchanges, Binance and Coinbase. 

On June 5, the SEC filed a lawsuit against Binance for allegedly offering unregistered securities. Only a day after filing the Binance suit, the commission also went after Coinbase on similar grounds, alleging that popular cryptocurrencies offered by the exchange, such as Solana (SOL), Polygon (MATIC) and The Sandbox (SAND), qualify as securities.

Cointelegraph reached out to market players working in the space for their responses to the recent actions by the SEC. From sharing a belief that it will drive crypto companies away from the U.S. to simply calling the SEC’s actions lazy, industry players shared their thoughts on the latest developments.

An ‘unacceptable’ approach to regulation

According to Kristin Smith, the CEO of the Blockchain Association, while the SEC’s actions are expected, it’s still unacceptable. Smith explained that:

“The SEC doesn’t make the law. Indeed, this approach to regulation is unacceptable, but it is what we have come to expect from the SEC and its anti-crypto stance.”

The executive highlighted that while the industry and the U.S. Congress are working to develop effective regulation, the SEC “continues to distract from substantive policy efforts.” The executive believes that by listing assets this way, the SEC is trying to circumvent formal rulemaking processes and deny public engagement.

Meanwhile, Paolo Ardoino, the chief technology officer of stablecoin issuer Tether, believes companies’ complaints against the SEC should be listened to. According to Ardoino, the uncertainty of rules and guidance in the U.S. is becoming a common theme, even among the country’s biggest crypto supporters.

Turbos Finance CEO Ted Shao also echoed Smith’s sentiment. Shao says this is “not the direction Web3 developers want to see.” The executive believes the SEC showed that it’s against the whole Web3 space, as they are also coming after top projects, not just centralized exchanges.

Driving crypto players abroad and weakening consumer confidence

In addition to the SEC’s actions being unacceptable, other professionals working in the space believe that the effects of this recent move include pushing crypto players to more crypto-friendly jurisdictions and weakening consumer confidence in crypto within the United States.

Insider Intelligence crypto analyst Will Paige said that the recent suits highlight the SEC’s intent to police the space through enforcement in the absence of a regulatory framework. According to Paige, this could potentially knock down the “already weak consumer confidence in cryptocurrencies” in the country.

Crypto ownership data from 2020 to 2023 and projection for 2024. Source: Insider Intelligence

Ben Caselin, the chief strategy officer at crypto exchange MaskEX, believes that while this is a case against Binance, it may have implications for other players in the United States. The former AAX executive explained that this can “open up more opportunities for other jurisdictions, such as Hong Kong, Dubai or even El Salvador, to drive innovation and attract capital and talent.”

Oscar Franklin Tan, the chief legal officer of nonfungible token protocol Enjin, agrees with the sentiment. According to Tan, the world will not wait for the U.S. to make up its mind on crypto. Tan explained:

“The SEC actions only drive talent and innovation out of the U.S. to countries with clearer rules that support responsible builders. Singapore, in 2020, stated it does not follow the U.S. Howey test. Japan has a clear self-regulatory framework for exchanges.”

The executive believes that “progressive countries” will reap the benefits, especially now that explosions in artificial intelligence and extended reality highlight the need for blockchain and genuine digital ownership.

Related: US Financial Services Committee sets date to discuss future of crypto

Doubts cast on SEC’s fairness and motivations

While some expressed their beliefs on the potential effects of the SEC’s lawsuit against Binance and Coinbase, other crypto professionals explored the motivation and fairness of the SEC’s move.

According to David Schwed, the chief operating officer of Blockchain security firm Halborn, the SEC’s mandate is to ensure the safeguarding of investors. Schwed believes that this can be done through clear regulations, not through enforcement actions. The executive added that SEC Chair Gary Gensler’s motivations may be skewed. “It seems to me that his personal ambitions and the need to validate his stance have now superseded his core mandate,” he explained.

Alex Strześniewski, the founder of the decentralized finance protocol AngelBlock, described the SEC’s actions as “lazy.” The executive believes that it does not drive proper regulation forward. He explained:

“It’s like a school teacher berating you for giving the wrong answers but failing to give any explanation beyond that. I also don’t believe that the SEC does, in fact, have jurisdiction over everything they’re claiming to.”

Meanwhile, Tim Shan, the chief operating officer at decentralized exchange Dexalot, expressed mixed feelings about the lawsuits and said the SEC’s actions are unfair to the community.

“They’ve provided very little clarity or guidance to the crypto community. They are regulating through the courts, which is really quite unfair and not the right way to regulate/govern,” he said.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?