Washington – The US security and exchange commission filed a lawsuit against Binance and Coinbase, the biggest names of cryptocurrency industry, intensifying situation between the government and crypto industry which already had been blemished by scandals.
The main accusation on Binance and Coinbase is that both companies have violated the law by operating as security exchanges without registering their businesses with SEC. Binance along with it’s CEO is facing additional accusations of diverting clients funds to other businesses. SEC also asked a federal judge to freeze Binance US platform assets. Crypto industry is facing it’s hard time from last 12 months where some of the bigger names have either filed section 11 bankruptcy or gone out of business. Treasury Secretary Janet Yellen told CNBC last week that she’s “very supportive” of the SEC using it’s powers to protect consumers and investors in crypto industry. She also added that she sees “some holes in the system where additional regulation I think would be appropriate and we would like to work with Congress to see additional legislation passed.”
The recent lawsuit is the latest development in the tussle between government officials who considered crypto industry as “Wild West” and the creators who wanted to register crypto as a future currency while SEC Chair Gary Gensler told Bloomberg last Tuesday: “We don’t need more digital currency … we already have digital currency — it’s called the U.S. dollar.”
Federica Pantana, an attorney from Davidoff Hutcher & Citron law firm experienced in handling SEC cases said “With the SEC taking a strong enforcement agenda, there is no question that firms have to take the view that crypto assets are securities and platforms that exchange these assets have to accept that.” Pantana also said that repercussions of legal actions will put some companies out of business.
While SEC keeping a strict watch over cryptocurrency companies, the industry was expecting the congress to intervene and make legislations that will secure industry’s future and limit regulators jurisdictions.
The most feasible legislation present in the House Financial Services Committee, headed by Rep. Patrick McHenry, a Republican from North Carolina. The legislation was co-authored by Glenn Thompson, another Republican from Pennsylvania., chairman of the House Committee on Agriculture. McHenry said in a news release that discussion draft of legislation seeks to delineate agencies’ jurisdiction over certain digital assets and “strike the appropriate balance between consumer protection and encouraging responsible innovation”
This new legislation will exempt the crypto companies and digital asset issuers from securities laws if they meet and fulfill certain conditions and would exclude digital commodities and payment stablecoins from the definition of a security under the securities laws. Lobbyists in favor of crypto beleive that legislation immediately needed to stop the SEC from moving forward with its lawsuits.
The outcome of the on going legal battle will either severely effect the growth of crypto industry or alternatively limits the jurisdiction and scope of SEC’s regulatory authority once and for all.
