0
0
By Jon Blistein
Coinbase is another large cryptocurrency exchange that has been charged by the Securities and Exchange Commission as part of its anti-crypto crackdown.
Coinbase serves as a stock exchange, clearing agent, and broker since 2019, yet hasn’t been registered with SEC. SEC states that Coinbase violated investor protections by denying them SEC inspections as well as recordkeeping and other safeguards.
Coinbase’s statement that it functions simultaneously as a clearing agency, an exchange, and a broker is one of the key safeguards. This complaint claims that the three major functions of Coinbase are separated from each other in traditional securities markets. SEC stated that it is important to keep these three functions separate “to reduce the risk of conflicts that may arise from combining these functions.”
Gary Gensler of the SEC said Coinbase unlawfully combined exchange, clearinghouse, broker-dealer functions despite it being subjected to securities law. These functions exist in separate parts of our markets. Coinbase’s alleged failings in protecting investors from fraud, manipulation, conflicts of interest, and SEC routine inspections are all a threat to their protection.
Paul Grewal’s comments on their charges were: “We feel that SEC’s approach of relying solely on enforcers without providing guidelines for digital assets is detrimental to US growth. Businesses like Coinbase have a history of adhering to regulations. In order to achieve the right outcome, laws must be properly developed through open discussion and uniformly applied. Lending is not an option. While we are waiting, business will go on as usual.”
Coinbase dropped charges one day following the SEC’s filing of 13 charges against Binance. The world’s biggest cryptocurrency exchange and its CEO/founder Changpeng Zhao. Binance not only misled its customers but also misused their money, the SEC said.
Zhou was a relatively low-profile man despite his high status. However, this has changed over the past few months. He has a large profile and has kept a low profile. But that changed recently after Binance’s ex-main rival, FTX (whose co-founder Sam Bankman Fried has pleaded no guilt to numerous campaign finance and fraud allegations) collapsed.
Chris Van Hollen from Maryland, in an interview with Rolling Stone said: “Clearly CZ lurked in the shadows.” Binance’s operations are difficult to trace, as is what the company does. He said: “We went through [Silicon Valley Bank’s] collapse which was regulated. Binance does not have any information. There is no information on this black box. I’m worried it will crash. The loss of money could be significant.”
