Cryptocurrencies in the crosshairs of the SEC, the accusations against Binance and Coinbase: what’s going on – Corriere.it

The Securities and Exchange Commission, the US equivalent of Consob, is stepping up the crackdown on cryptocurrencies. Within twenty-four hours, the authority sued both Binance, the largest cryptocurrency exchange platform in the world, and Coinbase, the largest platform in the United States. The charges against the two platforms are different. Coinbase is alleged to have acted as a broker and unregistered trading platform. Much more serious are the allegations against Binance, which is accused of improperly managing customer funds and of lying to regulators and investors about its operations. Now to worry investors the impact on market sentiment of this new tightening of the Sec. a piece of news that has been circulating for a while now and that does not seem to me to go in a positive direction for end users. Now, without going into the specific merits of the event, this represents yet another case of a centralized intermediary which, for one reason or another, has led to final damage to investors, says Leonardo Maria De Rossi, professor of Blockchain and cryptoasset at Bocconi University. We must always remember that the world of cryptocurrencies was born with the launch of Bitcoin, which de facto wanted to be an uncensorable financial alternative. To do this, Bitcoin is based on a totally decentralized technological protocol and an equally decentralized organizational structure. So relying on centralized intermediaries like Coinbase tends to be inconsistent with the initial vision, he adds.

The risks for those who rely on platforms

If an investor wants to keep their Bitcoins within these platforms, they probably don’t really have in mind why Bitcoin was created and only see it as a speculative asset to trade with. Unfortunately, what emerges from our analyzes within SDA Bocconi’s DEVO Lab is that the majority of investors driven only by speculation and ignore the underlying ideological and technological dynamics, continues the Bocconi professor. This leads many investors to blindly trust intermediaries such as Coinbase and to store their cryptocurrencies within it. A mistake for those who want to be sure they are the technical owner of their assets, underlines De Rossi.

The SEC requests to freeze Binance’s assets

On Tuesday, June 6, the SEC asked the US judicial authorities to issue a temporary order to freeze the assets held by Binance in the country. The request was filed just one day after US regulators sued the platform. The motion aimed at ensuring the security of customer assets, reads in the court documents. According to allegations by the regulatory authority, Binance has commingled billions of dollars of customer funds and secretly sent them to a separate account owned by founder Changpeng Zhao. According to the SEC, Zhao and Binance have consciously chosen to circumvent the rules, putting their customers and investors at risk in an effort to maximize their profits. Binance countered that the lawsuit was unfounded. Furthermore, the company highlighted that Binance cannot be considered a US stock exchange and, therefore, the power of action of the SEC is limited.

The allegations against Coinbase

In the 101-page lawsuit filed in New York court against Coinbase, the SEC accuses the platform of years of evading the rules by allowing at least 13 crypto assets to be traded despite not being regularly registered as securities with the authorities. The SEC’s approach hurts America, Coinbase CEO Brian Armstrong said, noting that his platform has repeatedly tried to register but there is no way to do so. The action against Coinbase, he added differed from the others in that it focused solely on what or not a stock. We have faith in facts and in the law. According to the American Consob, at least 13 of the cryptocurrencies available to Coinbase customers are crypto asset securities or financial products, and for this reason the platform should have registered as an exchange.

What could change

Some states such as Alabama, Illinois, California and New Jersey have also taken action against Coinbase to prevent the trading of unregistered securities on the platform. These lawsuits, like that of the SEC, raise a number of questions about the nature of digital assets and whether they can be considered securities or less. The chairman of the SEC, Gary Gensler, said that “anything that is not Bitcoin” is considered a security that falls within the purview of the agency. an interesting observation. We have always considered Bitcoin as an experiment different from the others. There are tests to determine whether an asset is considered a security or not, including the most famous probably called the “Howey test”. Certainly, considering all cryptocurrencies as security tokens and Bitcoin as a commodity would be significant and would definitively clarify the difference between Bitcoin and other cryptocurrencies, explains De Rossi. In these we also ask ourselves what the effects of the SEC’s actions may be on the future of cryptocurrencies. I don’t see big long-term impacts. The risk that some investors will lose their deposits in cryptocurrencies due to an exchange – says De Rossi -. I believe that as time goes on, investors will understand more and more about good practices for safekeeping their assets. And the more this happens, the more investors will use dedicated wallets – i.e. virtual custody wallets. At the same time, I believe that more and more developers are under “pressure” and willingness to develop decentralized trading platforms in order to avoid situations like this.