Binance and Coinbase push back against SEC's enforcement actions, demand regulatory clarity

Banking & Financial Services
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Coinbase CEO Brian Armstrong and Binance CEO Changpeng Zhao (CZ) | coinbase.com ; Ben McShane/Web Summit via Sportsfile licensed under the Creative Commons Attribution 2.0 Generic license

In a dramatic escalation of regulatory pressure on major cryptocurrency exchanges, the U.S. Securities and Exchange Commission (SEC) has launched legal actions against Binance and Coinbase. The SEC accuses the two platforms of violations related to securities laws, marking a pivotal moment in the relationship between regulatory authorities and the cryptocurrency industry.

On June 4, the SEC filed a complaint against Binance, alleging it has been illegally operating as an unregistered securities exchange. 

In response, Binance released a statement expressing disappointment at the SEC's decision, maintaining it has cooperated fully with the investigations and engaged in good-faith discussions to settle the matter. Binance categorically denied any allegations that user assets on its platform have been at risk, pledging to defend vigorously against these allegations. 

Addressing claims that user funds were being “misused,” Patrick Hillman, Chief Communications Officer of Binance, firmly declared these allegations "patently false."

Binance expressed its commitment to “continue to cooperate with regulators and policymakers” fostering a “productive engagement to ensure the next generation of cryptocurrency regulation fosters innovation while implementing and ensuring important consumer protections.”

“We will work alongside industry partners to defend this important technology from misguided lawsuits,” the Binance statement read.

Simultaneously, the SEC has also filed charges against Coinbase Inc., claiming it has been operating as an unregistered national securities exchange, broker, and clearing agency. The complaint also states that Coinbase failed to register the offer and sale of its crypto asset staking-as-a-service program. The SEC alleges that these operations deprived investors of significant protections such as SEC inspections, recordkeeping requirements, and safeguards against conflicts of interest, among other concerns.

Coinbase CEO Brian Armstrong defended the company via Twitter, highlighting that Coinbase had been reviewed by the SEC and allowed to become a public company in 2021. 

“Regarding the SEC complaint against us today, we're proud to represent the industry in court to finally get some clarity around crypto rules,” Armstrong tweeted.

He further stressed the company's attempts to comply with registration requirements and criticized the conflicting definitions of securities and commodities offered by the SEC and the Commodity Futures Trading Commission (CFTC).