Moment of Destiny. How the SEC lawsuits will turn out for the global crypto market

Moment of Destiny. How the SEC lawsuits will turn out for the global crypto market

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Author: Robert Strickland (crypto-journalist)
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Moment of Destiny. How the SEC lawsuits will turn out for the global crypto market
Interviewed experts spoke about the consequences of the SEC lawsuits against Binance and Coinbase
Experts analyzed the regulator's claims and spoke about their impact and implications for the entire crypto industry

The U.S. Securities and Exchange Commission (SEC) has filed lawsuits against two of the world's largest cryptocurrency exchanges, Binance and Coinbase. The regulator is making a number of allegations against both, chief among them is that a number of cryptocurrency assets traded on the platforms are recognized as unregistered securities falling under the regulator's purview.

In the June 5 lawsuit against Binance and the June 6 lawsuit against Coinbase, the regulator named several cryptocurrencies as securities.

In the first case, they were Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS) and COTI (COTI).

The second added Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), NEAR Protocol (NEAR), Voyager VGX (VGX), Dash (DASH), and NEXO (NEXO).

Speaking on CNBC after the Coinbase lawsuit was filed, SEC head Gary Gensler said that cryptocurrencies are essentially unnecessary at all. "We don't need more digital currency. We already have a digital currency. It's called the U.S. dollar. It's called the euro or the yen. They're all digital now," the head of the commission said. Bloomberg later advised the crypto sphere to bring the business in line with government policy, otherwise, it risks "falling apart like a house of cards."

"The decision on the lawsuit will be precedent-setting."
Crypto expert and author of the GFiS Channel telegram

The SEC has issued two lawsuits in the last 24 hours: against the Binance exchange and the Coinbase exchange. After the first claim, there was panic and dissatisfaction in the community and there were different versions of what is happening.

But I think that such activity, in general, is logical and logical, especially after the situation with the unexpected collapse of the FTX exchange in November last year. The commissions probably went with fair questions: "Where were you? Why didn't you stop activity happening virtually under your noses?" Former FTX head Sam Bankman-Fried actively interacted with SEC staffers, among others, discussing the intricacies of the regulatory process. Within this framework, a lawsuit against "good American Coinbase" looks understandable.

Besides, the U.S. still doesn't have separate legislation for the cryptocurrency industry. The situation is still at the stage of trying to divide influence between the SEC and CFTC (Commodity Futures Trading Commission). Both agencies would like to have control and influence over the cryptocurrency industry, so both regularly issue statements along the lines of "all cryptocurrency falls under the Securities Act," or "all cryptocurrency is a commodity."

As a result of this confrontation, there are still no clear norms for evaluating and assigning assets to one class or another. Meanwhile, the European Union has already developed and even signed a set of rules for the crypto-business called Markets in Crypto-Asset (MiCA).

"It will affect everyone in general." What is the threat of the law on cryptocurrencies adopted in the EU

It is very likely that the lawsuits against Binance and Coinbase are not something globally critical, but simply the regular work of the regulator. This, of course, will bring some trouble and inconvenience to the defendants, but does not by itself mean that the plaintiff is right. Binance has already publicly stated that it intends to defend its position. Coinbase has also previously voiced its displeasure with the actions of the SEC and also wants to take the case to court.

Coinbase CEO Brian Armstrong insists that the claim against his exchange is unfounded because there's no clear methodology for classifying assets as falling under the Securities Act. And the agency has not responded to a request to formulate criteria for assessing that affiliation.

The opposition is interesting and in some ways even historic in the development of the industry. It really is a kind of fateful moment that will determine the vector of further development for the next few years. But the development of the situation will take more than a week or a month, and the first decision on such a claim will be a precedent.

"The SEC is targeting seriously and won't back down."
Maria Telegina - lawyer, expert of the Moscow Digital School educational platform, member of the Commission for Legal Support of the Digital Economy of the Moscow branch of the Association of Lawyers of Russia

The lawsuits have just been filed and there are no judicial precedents indicating how the process will develop and what decision will be made. But based on the trend, the SEC is aiming seriously and will not retreat.

But respondents (Binance, Coinbase, and other companies) can refer to the fact that the regulation does not contain clear criteria for classifying this or that cryptocurrency as a security, so each company decides for itself which cryptocurrencies to work with and which not.

 

If at least one positive decision is made in favor of the SEC, the precedent system will play against exchanges dealing with the same cryptocurrencies. Binance and Coinbase are not the only companies being sued, the regulator's website shows. But these two companies are the largest in the world and work with customers from a large number of countries, which is why there is more interest in them.

This method of regulation shows that the regulator does not want to limit itself by the law, each time solving the issue through the courts. Such an approach unties its hands to specific players in the market, which contradicts the stability of the civil turnover.

"You can expect a wave of lawsuits."
Digital School instructor, Lidings

The new lawsuits are almost a classic SEC claim about trading securities in the absence of registration. In the case of crypto-assets, any level of dispute will require a determination of whether the crypto-assets traded on the site are securities in terms of U.S. law.

Moving the SEC's claims to court might be necessary, for example, to give precedent to the recognition of a particular crypto-asset as a security. This would make it easier to prosecute other venues that trade similar crypto-assets in the future.

Crypto exchange Bittrex will defend its position in court against the SEC

Given that similar claims were made in April against a number of companies and citizens associated with the crypto exchange Bittrex, we can expect a wave of lawsuits against other major crypto exchanges. At the same time, as we can see, the SEC is not limited to the U.S. jurisdiction.

 

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