Crypto Exchanges: The Beginning of the US SEC Witch Hunt?

Fri 5 August 2022 ▪ 16:00 ▪

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Mikaia ANDRIAMAHAZOARIMANANA

The US has about 40 cryptocurrency exchanges, according to CoinGecko. According to a close friend of pro-bitcoin Senator Cynthia Lummis, the local Securities and Exchange Commission (SEC) is investigating most of these projects. And not only! Binance is also currently in its crosshairs.

The Securities and Exchange Commission orders a massive crackdown

The SEC in the US is not easy. If she doesn’t prove her case against a crypto project in court, it’s because she’s busy opening an investigation against a company. You have surely heard about a dispute between this regulatory body and the American exchange Coinbase. The reason: this $20 billion company has in no way complied with applicable law by proposing to trade in “ securities ” Not registered.

As a reminder, 6 things can trigger the SEC investigation:

  • unregistered securities;
  • insider trading;
  • accounting deficiencies;
  • lack of supervision;
  • broker-dealer sales practices;
  • and disclosure of misleading or fraudulent information.

Now everything is clear for the Coinbase case. We can easily find on this list the responsibility for Brian Armstrong’s company.

But what about the others? The others are the rest of the US crypto exchanges and Binance, whose opening of the investigation worries a member of the office of Senator Cynthia Lummis. According to this senior official, the Securities and Exchange Commission is investigating their matter.

Says no confirmation has been given from the agency so far.

SEC Wants to Harmonize with Commodity Futures Trading Commission (CFTC)

According to the same person, this initiative by the SEC would have something to do with a dispute with the CFTC in the United States. If her approach fails, she will not succeed in the eyes of US lawmakers. The latter will then switch to the side of the CFTC.

For your information, the Commodity Futures Trading Commission is akin to a federal government agency whose goal is to regulate derivatives markets. Although its functions are similar to those of the Securities and Exchange Commission, the CFTC stands out for its special oversight of options, agricultural commodity futures, currencies, metals and exchanges.

The dispute with the SEC would concern the case of Ethereum, which before the arrival of Gary Gensler at the head of the organization was not considered a stock market value. Its regulation, as well as that of bitcoins and other altcoins, had therefore returned to the CFTC. This change in the SEC’s stance would therefore be the cause of some sort of confrontation between the two.

Saying that it will be up to US lawmakers to decide on the subject. The CFTC is currently supported by US Senators Debbie Stabenow and John Boozman. On the other side of the aisle are pro-bitcoins Cynthia Lummis and Kirsten Gillibrand, who favor a bipartisan proposal to regulate digital assets with a more comprehensive scope.

Certainly, the need for regulation, especially clearly, is a necessity for the crypto universe. But from there to lead a witch hunt, to rule with an iron fist, the projects risk losing their dynamism. Provided that the affected entities count for the balance sheet, for the agreement and the best projections for the future.

Source: The balance sheet; DRY ; Securities Lawyer 101; Forbes

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Mikaia ANDRIAMAHAZOARIMANANA avatar

Mikaia ANDRIAMAHAZOARIMANANA

The blockchain and crypto revolution is underway! And on the day when the effects will be felt on the most vulnerable economy in this world, against all hope, I will say that I had something to do with it

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