Objections from the SEC
On Monday, the Securities and Exchange Commission (SEC) filed a lawsuit against Binance and founder Changpeng Zhao, citing “flagrant disregard for federal securities laws” and self-enrichment at the expense of investors. The complaint further alleges that Binance commingled customer funds (similar to FTX), putting user assets at risk.
Enforcing Mandatory Registration
The SEC’s lawsuit is a new effort to compel cryptocurrency exchanges and developers to register with the SEC, which would require them to adhere to stricter regulations, including increased transparency to investors and a prohibition on certain conflicts of interest. In March, the Commodity Futures Trading Commission (CFTC) became the first federal regulator to sue Binance and Zhao for offering derivatives without being registered with the CFTC (which is prohibited by U.S. law).
Criminal Prosecution on the Horizon?
The Department of Justice is taking it a step further by investigating whether Binance and/or Zhao could face criminal charges for not/insufficiently implementing anti-money laundering measures.
Nevertheless, we believe that these developments are necessary to instill more maturity in the cryptocurrency market. The clearer the legal framework, the more room there is for growth. In the long run, this will only further stimulate innovation.
What does it mean for us?
Not much, I have shifted away from Binance into other platforms, as I have adapted the policy of unreliability, keep as much funds of exchanges as possible and always have several exchanges ready to use in case needed. Due to this preparation unavailability is a non-issue for us.
