SEC Investigates Binance, All US Crypto Exchanges: Forbes

Key takeaway

  • The SEC is investigating Binance and all U.S. cryptocurrency exchanges, said a Forbes report citing an unnamed source from Senator Lummis (R-Wy) office.
  • The SEC has stepped up its efforts to regulate the digital asset space in recent weeks, including an investigation into Coinbase for alleged lists of unregistered stocks.
  • The financial regulator faces a battle with the Commodity Futures Trading Commission as it attempts to establish itself as the leading US regulator of the cryptocurrency market.

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The financial regulator has stepped up oversight of the digital asset space in recent weeks.

American stock exchanges under investigation

Coinbase isn’t the only cryptocurrency exchange the SEC is keeping an eye on, according to a staff member of Senator Cynthia Lummis (R-Wy) office.

A Thursday report from Forbes citing an unnamed employee from the Lummis office said the US financial regulator is probing Binance and every US cryptocurrency exchange. According to the source, the SEC is looking to establish itself as the country’s leading cryptocurrency regulator as it continues its battle with the U.S. Commodity Futures Trading Commission for oversight of the industry.

The CFTC has maintained authority over “virtual currencies” since 2014, but in recent years the SEC has made it clear that it wants to hold a court in space. SEC President Gary Gensler has warned on multiple occasions that many crypto tokens could qualify as unregistered securities, and last week the agency made its strongest suggestion that it wants to crack down on the nascent market. In a court statement alleging that a former Coinbase employee and two of its associates engaged in insider trading, the SEC said the exchange allows customers to trade “at least nine” unregistered securities.

SEC steps up oversight of cryptocurrencies

While Coinbase’s insider trading allegations sent shockwaves across the industry, the SEC’s claim was also noteworthy as it has never targeted an exchange previously on its supported tokens. It then emerged that the regulator was probing Coinbase. Binance.US responded by removing one of the mentioned tokens, AMP.

The SEC’s wrath didn’t stop with Coinbase. Since the filing of insider trading, Gensler said he sees no difference between cryptocurrency exchanges and traditional stock trading venues, adding that there are “inherent conflicts of interest” with exchanges acting as market makers. The SEC also charged 11 people behind Forsage in what it called a “crypto pyramid scheme” that cost investors $ 300 million.

While the SEC recently stepped up its efforts to regulate the digital asset space, the CFTC has also received a possible avenue to establish greater oversight of cryptocurrencies. This week, the Senate Agriculture Commission introduced the Digital Commodities Consumer Protection Act of 2022. If passed, the new bill would see Bitcoin and Ethereum classified as commodities and give the CFTC oversight of the exchanges that list them for trading. With Bitcoin and Ethereum holding the top two places in the cryptocurrency ranking, that would include The US division of Binance, Coinbase and every other major cryptocurrency exchange. The bill could theoretically still see other tokens classified as securities and thus fall within the purview of the SEC. However, the bill is expected to go through Congress to take effect, meaning the CFTC and SEC clashes could continue for some time yet.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.

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