Latest developments in SEC’s “Operation Thunder”: Coinbase refuses to take down tokens and services, while Binance retaliates by actively seeking Gensler’s advice as a consultant.

In SEC's "Operation Thunder," Coinbase did not comply with requests to remove tokens and services. Meanwhile, Binance sought Gensler's advice as a consultant in retaliation.

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After the SEC filed consecutive lawsuits against Coinbase and Binance, both companies responded.

Coinbase’s response was very strong:

Coinbase has no plans to delist cryptocurrencies that SEC has charged as securities. “We will continue to operate as usual, and these assets will continue to trade until the court makes a ruling.” They will also not stop their staking services.

Coinbase is charged with unregistered securities including SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO.

Coinbase stated that the U.S. Securities and Exchange Commission began changing its “tone” of questioning the company last year. The company has not lost customers or banking partners. “More than $5 billion on our balance sheet is allocated to operating expenses and legal costs.”

Binance, on the other hand, threw back a response to SEC Chairman Gary Gensler.

According to CNBC, documents submitted by the SEC on Wednesday showed that lawyers from Binance’s two law firms, Gibson Dunn and Latham & Watkins, claimed that Gensler suggested becoming an advisor to the cryptocurrency exchange during conversations with Binance executives and CZ in March 2019. The documents said that he eventually had lunch with Zhao in Japan later that month. CZ continued to keep in touch with Gensler after the March meeting. At the request of the future SEC chairman, CZ sat down for an interview with Gensler, which was part of his cryptocurrency course taught at MIT. Later in 2019, Gensler would testify before the House Financial Services Committee, and he sent a copy of his planned testimony to CZ before the hearing.

At the time, Gensler was a professor at the MIT Sloan School of Management. He was appointed as chairman of the U.S. Securities and Exchange Commission by President Biden in 2021. The lawyers said that Gensler tried to please the company before he began investigating Binance because of his relationship with CZ.

Because of Gensler’s relationship with CZ, Binance’s lawyers said they have asked him to recuse himself from any action related to the company. They say they have not received confirmation from SEC staff. An SEC spokesperson said in a statement to CNBC, “The Chairman is completely aware of and abides by his ethical obligations, including any recusal obligations.”

However, in a March 5 article, The Wall Street Journal reported the opposite, stating that Binance staff had actively invited Gary Gensler to serve as an advisor, and that Ella Zhang and Harry Zhou, who were responsible for Binance’s venture capital department, met with Gensler in October 2018. Zhou wrote: “I noticed that although Gensler declined the role of advisor, he generously shared his licensing strategy.”

However, unlike Coinbase, Binance US has announced that it will remove hundreds of trading pairs, including 1INCH/USDT, AAVE/USDT, ALICE/USDT, ALPINE/USDT, ANT/USDT, and APE/USDT, starting at 0:00 on June 9 Beijing time. It will also simplify its buy, sell, and convert products, reduce the number of supported conversion trading pairs to 226, and suspend its OTC trading services. Binance US stated that all cryptocurrencies can still be traded, and only some trading pairs in the advanced trade section are affected.

At the same time, the SEC issued a civil subpoena to Zhao Changpeng, requesting a response to the attached appeal or motion within 21 days in accordance with Rule 12 of the Federal Rules of Civil Procedure. CZ responded that it was only part of the SEC compliance process and that he did not need to appear in person.

Sources:

https://www.axios.com/2023/06/07/coinbase-crypto-tokens-sec

https://www.bloomberg.com/news/articles/2023-06-07/coinbase-ceo-says-sec-started-to-change-tone-last-year

https://www.cnbc.com/2023/06/07/binance-lawyers-say-sec-chair-gensler-offered-to-be-advisor-in-2019.html

Image source: The Wall Street Journal

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