If you didn’t know already, the United States Securities and Exchange Commission has filed a lawsuit against Binance and Coinbase, two of the largest crypto exchanges in the world. However, many people are questioning whether they are right to do so.
It is well known that the SEC has something against Crypto Currency and rightly so. It is one of the most unregulated industries in the world and deals with billions of dollars.
These lawsuits are massive and have affected the industry massively. Bitcoin dropped 26,806 to 25,440 in four and a half hours. Binance coin went from 300 to 276 however Bitcoin managed to recover after those losses. Binance has continued to decrease, now valued below 260.
Why IS The United States Securities and Exchange Commission Cracking Down On Crypto?
Since the launch of crypto and its ongoing popularity of digital currency, SEC has been cracking down on the industry, especially after the FTX collapse in November. Sec has now launched 30 crypto-related enforcement, making the industry question its legitimacy and the SEC first clashed with Genesis Capital and Gemini with their crypto lending scheme. These two trading groups also suffered during the FTX collapse.
Not long after this, SEC claimed Terraform Labs and Do Kwon, the CEO of the operator, were defrauding their investors. It isn’t just major stakeholders in the industry that are targeted either. Kim Kardashian also had a lawsuit filed against her for touting EMAX tokens. The consequence of this is that Kardashian had to pay a 1.26 million dollar fine.
Despite all of these cases, it isn’t all doom and gloom for the crypto industry. In 2020, SEC sued the company Ripple due to operating unregistered securities for their coin, XRP. If this passes and Ripple is found not guilty, this will have a massive impact on the industry, shooting up the prices of many cryptocurrencies around the world.
The two recent cases launched on both Binance and Coinbase could put the industry back five or ten years. The current valuation of these coins could lose value rapidly, leading to people losing millions of pounds in their investments. Nonetheless, major investors understand the risk of cryptocurrencies.
Why Has SEC Filed A Lawsuit On Binance?
The main reason the lawsuit against Binance has been filed is because of the accusation towards the CEO of the company. Changpeng Zhao has been accused by the SEC of sending billions of dollars of customer funds to the companies that Zhao also owns or plays a major role in. As it stands, there are a total of 13 civil charges against the CEO of Binance.
It doesn’t stop there for the lawsuit against Binance either. They have also been charged for unregistered securities. However, the evidence is quite strong in this one. The former chief compliance officer said to another colleague back in 2018 that they are “an unlicensed security exchange in the USA” over a text message.
Although Binance has reacted professionally to the allegations from SEC, they have also said they are not guilty of the charges. They have also mentioned that the SEC has used “blunt weapons of enforcement and litigation”.
Why Has SEC Filed A Lawsuit Against Coinbase?
It didn’t take SEC long for them to focus on another major player which is Coinbase. They also claim that Coinbase has been operating unregistered securities. However, Coinbase stated that SEC is only focusing on the industry because of the absence of clear rules in the industry and is competing with the finance market in the US.
Although the relationship between Coinbase and the SEC has been “friends” however it is only until recent months that their relationship has crumbled. Coinbase sued SEC because they wanted to have answers for legalising crypto securities.
To Conclude
As you may know and have seen in the news, cryptocurrency is highly volatile. Due to this, it has helped people make millions, whilst others have lost millions. Nonetheless, this is a battle that is far from over, with many people believing cryptocurrency will be the frontrunner for many countries across the world.
SEC is looking to make the industry more regulated however, many people believe they are going the wrong way about it. Crypto companies believe that there isn’t enough legislation in the industry, causing them to break the rules, even though there are very few in place.
As lawsuits for Binance and Coinbase continue, many people have doubts about the digital industry. Nevertheless, many traders still have faith in the industry and digital currency, using it to make millions. If you are one of those traders who have lost money in the crypto industry, your money might not be lost yet. There are many crypto recovery firms that aim to help you recover the money you have lost.
