A leading industry analyst said the U.S. Securities and Exchange Commission's lawsuit against cryptocurrency giant Binance is "kind of an endorsement" of the firm.
Matt Levine, a lawyer and former investment banker-turned journalist, made the comment in his Bloomberg opinion column published Tuesday.
“I am tempted to read yesterday’s lawsuit as kind of an endorsement of Binance by the SEC,” Levine said in his Money Stuff newsletter. “The SEC, and before it the CFTC (Commodities Futures Trading Commission), investigated Binance carefully and wrote a 136-page complaint about every bad thing it could find, and all it could find is that Binance is running a crypto exchange.”
"For the most part, the Binance complaint is the same as the Coinbase complaint: Binance is accused of operating a crypto exchange that was open to U.S. customers and that listed crypto tokens that are securities, without registering as a US securities exchange," Levin said. "When an exchange steals all the money, the SEC focuses on that. When it doesn’t steal all the money, the SEC focuses on the illegal securities exchange stuff."
The SEC also sued cryptocurrency exchange Coinbase on Tuesday.
In a blog post, Binance said the company is "disappointed" in the SEC lawsuit, slammed the agency for its "refusal to productively engage" the company and said the action "is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry."
Coinbase CEO Brian Armstrong responded to the SEC lawsuit with a tweet, highlighting the fact that the SEC and CFTC "have made conflicting statements, and don't even agree on what is a security and what is a commodity." He emphasized the need for Congress to move forward with legislation that will establish regulatory certainty for the industry and criticized the SEC's "regulation by enforcement" approach.
Last year, Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) introduced the "Responsible Financial Innovation Act," which they said would create regulatory clarity for the cryptocurrency industry. The proposed bill, aiming to largely categorize digital assets as commodities, would assign regulatory authority over the digital asset spot market to the CFTC.
Levine was a U.S. Court of Appeals clerk and worked for Goldman Sachs.