Cameron Winklevoss has called out the US SEC for its bad crypto regulations following the Ripple case partial loss.
The Gemini boss has expressed that some SEC’s practices, such as allowing companies like Coinbase to go public only to charge them later, are ludicrous.
Gemini boss Cameron Winklevoss has expressed dissatisfaction with the US SEC’s unrealistic crypto regulation approach. He pointed out on Coinbase story where the US SEC allowed it to go live only to charge them later, calling it “ludicrous.”
SEC allowing a company to go public and then charging it is ludicrous- Cameron Winklevoss
Coinbase is one of the many crypto organizations that are ‘victims’ of the US SEC’s regulatory sword. The crypto exchange has featured in a high-profile lawsuit where the US SEC alleges that it is trading crypto securities in the country without its permit.
Coinbase has, however, challenged the allegation that it cleared with the regulator long before going live. However, the US SEC still feels that more needs to be done. In a Thursday court proceeding, SEC lawyers claimed that simply because it allows a company to go public doesn’t mean it has its blessings.
“Simply because the US SEC allows a company to go public, it does not mean that it is blessing the company’s business,” said SEC’s Peter Mancuso.
This statement has come through as a trap for companies, as the US SEC should only have allowed a company to go live in the first place if it was satisfied with the business it had outlined in the initial filing.
Judge Faila replied to Mancuso, saying she was skeptical about the whole saga and would have thought that the form S-1 (a registration file) would have involved due diligence. She added:
“They (referring to SEC officials) could have said, ‘Hey, you have filed as a securities exchange.’ That was within their power was it not?”
Cameron Winklevoss has come out against the US SEC for doing this to Gemini, saying it’s ludicrous. Keep watching Fintech Express for more updates on Coinbase vs. SEC and other Fintech-related developments.
Should crypto exchanges be allowed to defraud investors? Of course not! No one in their right mind would even remotely back that statement. And many in the crypto realm are ready for a regulatory framework to protect investors. But that’s not what the US SEC is doing to crypto projects.
Every other day, it becomes clearer that the regulator has a target on crypto’s back. It’s not creating regulations; it’s just one assault after another. In fact, the million-dollar question in crypto is, ‘does the US SEC plan to kill crypto?’
Who is the US SEC?
The United States Securities and Exchange Commission (US SEC) is a US regulatory arm for investor protection. After the wall street crash of 1929, the US Congress addressed the need for a regulator to prevent similar incidents. Born in 1934, the US SEC came to curtail fraud and manipulation while preserving capital markets’ integrity.
Maintainance of fairness and order in financial markets.
Facilitating fair capital access for small businesses.
In rigorous processes, the US SEC scrutinizes and screens financial markets to oust any wrongdoers. Because of SEC’s determination for about nine decades, financial markets are safer from fraud.
The body consists of 5 commissioners, one of them being the chair, Gary Gensler. Each commissioner serves for a 5-year term before being replaced. Their screening process involves appointment by the president and approval by the Senate. Three of the currently serving SEC commissioners are Joe Biden appointments.
US SEC’s Thirst for Crypto Blood
Despite its good role in investor protection, the ombudsman is overstepping its bounds when dealing with crypto. Most recent SEC actions targeted individual crypto coins, projects and even business protocols.
All altcoins are securities!
Crypto stakeholders secured their first grand triumph after a federal court declared any non-institutional sale of XRP as not a security sale. The victory celebrated across crypto debunked SEC’s biggest attack weapon, ‘the security tagging.’ Earlier this year, US SEC Chair Gensler claimed all cryptocurrencies except Bitcoin are securities, a statement he failed to back when asked before the Financial Services Committee.
Using Howey’s Test, US SEC classified dozens of cryptocurrencies as securities, including DASH, ALGO, XRP, BNB, BUSD, ADA, and SOL. Many of the coins attacked are best-selling high market cap assets. Attacking high-cap crypto coins sells FUD, reducing confidence levels. Consequently, thousands of US-based investors sell their holdings to avoid future losses.
SEC’s spin-off following the loss of the XRP case is intriguing. In an embarrassing twist of meanings, the US SEC statement noted that “the court agrees that Howey test governs security analysis of crypto transactions.”
SEC Statement on Ripple has vibes of young campaign hack spinning on bad facts, vs powerful government agency expected to tell the truth. Do better. pic.twitter.com/NIYc5260rL
There seem to be no limits to SEC’s attacks towards the blockchain realm. Recent legal charges against Binance and Coinbase are cases in point.
Coinbase fell on SEC’s radar for allegedly violating the Securities Act of 1934 regarding the sale of a security. SEC noted that Coinbase operated “an unregistered national securities exchange, broker, and clearing agency.”
Binance’s offence is the alleged violation of US laws by allowing US customers to trade. Both Binance and its head Changpeng Zhao face allegations of deception, manipulative trading and operating an unregistered broker.
Another innovator in SEC’s claws is Alex Mashinsky, the ex-Celsius CEO and founder. Mr Mashinsky took a not-guilty plea for 7 criminal counts in a Manhattan US federal court.
US SEC raised charges of “failing to register the offer and sale of their crypto asset staking-as-a-service program” against Kraken. The exchange settled with a $30 million fine and a declaration to stop the staking program.
All crypto exchanges under SEC’s radar have enormous trading volumes and considerable reputations. The elimination of Binance and Coinbase leaves a big gap in US crypto markets. But, these attacks will resume until all other exchanges bow out or agree to be tied with SEC’s ropes.
Is SEC just Biden’s dirty agent?
President Joe Biden’s standpoint on crypto markets and traders is no mystery. When the debt ceiling dilemma hit the US in May, Mr Biden unwelcomed any deal protecting crypto traders. His statement grouped crypto traders with tax cheats. Since his election, Biden set crypto markets up for invasive grilling by regulators like CFTC, IRS, and SEC.
Gensler’s appointment targeted tightening crypto regulation. Mr Gensler’s reputation was that of a tough regulator, and true to those words, Gensler has never laid back on crypto regulation.
A Forbes article in Jan 2022 mentioned Biden’s desire to probe cryptos for any security-like traits. This came shortly after Gensler’s appointment. And one year later, dozens of coins are securities based on SEC.
Is there some form of abuse of power in the SEC chair’s office? Yes. An unjustified crypto raid is an abuse of power. Moreover, politicising crypto market regulation is out-and-out mismanagement.
SEC plans a dance on crypto’s grave!
You can justifiably conclude that the SEC wants to kill crypto. James K. Flain, a defence attorney, agrees. In a tweet last December, Mr Flain said, “The SEC doesn’t want to regulate crypto; it wants to kill it in the United States.”
Jake Chervisnky, the Chief policy officer of the Blockchain Association, endorses the speculation. In an episode of The Chopping Block, Chervinsky noted the SEC resolved not to try to regulate crypto but instead kill it. And it’s possible that the SEC seeks a complete annihilation of crypto in the US.
Thinking out loud!
However, crypto is too widespread to fail. So, what’s SEC’s target? Money! The crypto industry is a grand source of money. The fines for alleged irregularities and taxes garnered can partly fund Biden’s trillion-dollar infrastructure bill. SEC’s unstoppable march towards crypto projects could be a way of securing funds.
Ripple won a court battle against the US SEC that XRP is not a security
The development is causing an uproar, with the US Financial Services GOP asking the SEC to work with Congress to regulate the industry
Gary Gensler is under fire after the US SEC partially lost a case against Ripple in the Southern District of New York. Judge Torres ruled on July 13 that the XRP token is not a security so long as it is traded programmatically on exchanges. The US House Committee on Financial Services for Republicans has asked him to work with Congress to regulate digital assets.
Gary Gensler and Congress must work together following the partial loss in the XRP Ripple case
The US House Committee on Financial Services has asked Gary Gensler to cooperate with the US Congress to regulate crypto assets following a disgraceful loss against Ripple, and the US SEC partially lost that the sale of XRP tokens on primary markets does not constitute securities features.
However, the sale of XRP tokens to institutional investors and venture funds passes the Howes test and can be regulated under securities laws. As a result, Coinbase and Binance have gained an edge against the SEC in the ongoing crypto lawsuits, which shows the authority did not do a very good job when pushing Ripple in a years-long court battle.
This development calls for unison in regulating crypto assets, a move that House Rep Emmer agrees with. Emmer and other lawmakers have tabled a regulation to see Gary Gensler ejected from power and SEC restructured, but it is yet to be heard and voted in the US Congress.
Keep watching Fintech Express for more updates on this and other fintech-related developments.
The former CEO of the bankrupt crypto lender Celsius Network Limited has been arrested by the US
Alex Mashinsky was arrested pending a probe by the US authorities into how Celsius was operated
Alex Mashinsky is being sued by the US SEC following the collapse of the crypto lender Celsius. Mashinsky served as the CEO of the fallen crypto giant till its last days.
US arrests Alex Mashinsky over collapsed crypto lender Celsius
Alex Mashinsky, the Ex-CEO of the fallen crypto liner Celsius Network Limited, has been sued by the US SEC pending an investigation. The SEC believes that Alex Mashinsky knowingly ignored securities laws when operating Celsius crypto lender, exposing US users to unmitigated risks.
The lawsuit against Mashinsky was communicated on July 13 2023, and was filed with the US federal court in Manhattan. Earlier on, New York Attorney General Letitia James had sued him on claims of him defrauding investors by making false advertisements on the state of Celsius Network Limited, which encouraged the continued flow of money.
Alongside the US SEC, other US regulators such as the Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC) have also filed separate lawsuits against Celsius Network and Alex Mashinsky.
Mashinsky’s charges include Securities Fraud, Commodities Fraud, Wire Fraud, and Conspiracy to manipulate the price of CEL (celsius native token. Fraudulent scheme to manipulate the price of CEL, Market Manipulation of CEL tokens, and Wire Fraud in connection with CEL token manipulation.
Now, Mashinsky has joined a growing list of ‘crypto kingpins’ that have been involved in losing millions of dollars to their users and creditors. The US is also pursuing several other crypto executives, including but not limited to FTX’s Sam Bankman Fried and Terra’s Do Kwon. It is also in a court battle with Binance US and CEO Changeng Zhao, Coinbase, and its CEO Brian Armstrong.
Keep watching Fintech Express for more updates on this story.
UK FCA and other enforcement agencies have investigated 26 crypto ATMs and shut them down.
The shutdown was conducted as per the Money Laundering Regulations that were set in place in 2017
UK FCA has joined a growing group of hawkish regulators after spearheading multiple crypto crackdowns. Now, it has ordered the shutdown of 26 crypto ATMs that have worked against set rules.
UK FCA intensifies crypto crackdowns
The report on UK FCA cracking down on crypto ATMs comes at a time when global crypto regulation efforts are intensifying. The regulator worked hand in hand with others to visit and inspect 34 crypto ATMs in 2023, an exercise that concluded with the shutdown of 26 of the inspected ATMs.
The UK FCA had given an ultimatum to all crypto ATMs in February, requiring them to follow the set regulations or wind down their operations. Regarding the development, Steve Smart, the joint executive director of enforcement and market oversight at the UK FCA, said:
“If you use a crypto ATM in the U.K., you are using a machine operating illegally and may be handing your money over to criminals.”
He added that the U.K. government would not protect victims of the scams associated with such ATMs.
This development comes when other regulators like the US SEC intensify their efforts and oversight over the crypto space. The US SEC has a record-high budget to help it ‘streamline’ the industry. It is already in significant crypto court battles, with its targets Ripple, Binance, and Coinbase.
The US SEC claims that the crypto industry operates in incompliance and thus needs enforcement to be put in check. This sentiment appears to be shared by the UK FCA, which has been going hard after crypto operations land advertising in the U.K. However, the two regulators are different in that the U.K. expects its first comprehensive crypto regulatory framework, MiCA, to go live in December 2024, while the U.S. doesn’t.
Keep watching Fintech Express for more updates on this and other fintech-related developments.
DFSA has asked Saxo Bank to liquidate its crypto holdings citing risky investment
The process is expected to have a “very limited impact” on the bank’s functionality.
Denmark has asked one of its largest banks, Saxo Bank, to erase its cryptocurrency holdings as a de-risking effort. It expects the bank not to be impacted in any way while closing its crypto market positions.
No more crypto investments Saxo Bank: Denmark
The developments come at a time when regulators in Denmark seek to go after crypto services providers citing investment risks. It has declared that all local banks cannot hold any crypto assets to hedge against trading risks.
The Danish Financial Supervisory Authority (DFSA) announced on July 4 orders for Saxo Bank to dispose of its crypto holdings under claims that such assets lie outside the legal business of financial institutions in Denmark per section 24 of Denmark’s Financial Business Act.
DFSA explained that Saxo Bank has exposed itself and its customers to trading risks by bridging them to the crypto markets. It also said that apart from direct crypto assets, exchange-traded funds and exchange-traded notes tied to crypto assets should be included in the disposal list as it is possible to speculate on the crypto market.
The regulator also cited Annex 1 of the Financial Business Act, saying that financial institutions should not publicly trade crypto assets in the country. An excerpt from the announcement reads:
“Based on the above, Saxo Bank’s trading in crypto assets for its account is outside the legal business area of financial institutions. On this basis, Saxo Bank is ordered to dispose of its holdings of crypto assets.”
The regulator also mentioned the preparedness of Denmark to onboard European Union’s Markets in Crypto Assets (MiCA) legislation saying that they will hit the set dates to effect it in 2024. MiCA is expected to be enforced in all EU member states starting December 2024 after the bloc’s parliament passed it in June. However, more steps will be required between now and its enforced date.
So keep watching Fintech Express for more updates on this and other fintech-related developments.
