Understanding SEC’s Regulatory Timeline and Responses from All Parties in One Article

Understanding SEC's Regulations and Responses from All Parties in One Article.

Since the news of “US SEC suing Binance and its CEO Zhao Changpeng for violating US securities trading rules” on June 5th, SEC’s actions have been continuous, and its regulatory attitude towards the cryptocurrency field has become increasingly severe. Not only have major trading platforms been deeply affected, but market trends have also fluctuated dramatically.

Blocking combed through SEC’s regulatory timeline to clarify SEC’s actions and responses from all parties.

June 5th: SEC sues Binance

SEC: Sues Binance and its CEO Zhao Changpeng for violating US securities trading rules, making 13 charges against Binance and Zhao, including mishandling customer funds and lying to regulators and investors about their operations. SEC said Binance has been mixing billions of dollars of customer funds and secretly transferring them to an independent company controlled by Zhao Changpeng. In addition, Binance misled investors about whether its system was capable of detecting and controlling manipulated trading behavior. SEC also said Binance did not take sufficient measures to restrict US investors from using unregulated exchanges. SEC mentioned in the lawsuit against Binance that securities include but are not limited to BNB, BUSD, and the following cryptocurrencies: SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI.

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Zhao Changpeng: The Binance team is on standby to ensure system stability, including withdrawals and deposits. Once we see the lawsuit, we will respond. We haven’t seen it yet, but the media got the information before us.

Others: BNB fell below $300 in the short term, reporting $291.8, and Bitcoin fell more than $300 in the short term, reporting $26,661.

June 6th: SEC sues Coinbase

SEC and Coinbase:

SEC: The US SEC sued the cryptocurrency trading platform Coinbase in a federal court in New York, stating that the largest cryptocurrency trading platform in the United States evaded regulation by allowing users to trade unregistered securities of cryptocurrencies. As a result, Coinbase (COIN.O) fell more than 12% before the market opened. In the Coinbase case, SEC defined SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO as securities. The US Securities and Exchange Commission (SEC) urged the court to make a final ruling, requiring the defendants and other related persons to directly or indirectly violate the “Securities Act”; requiring the defendants to return all illegal gains obtained in violation of the “Trading Act” on a joint basis, and ordering Coinbase to return all illegal gains obtained in violation of securities laws and its prepaid interest; requiring the defendant to pay civil fines under the “Trading Act” and “Securities Act”; requiring the court to give appropriate or necessary remedies under the “Trading Act” to protect the interests of investors.

Coinbase: Without clear rules for the digital asset industry, the SEC’s enforcement action harms America’s economic competitiveness and harms companies like Coinbase that have made clear commitments to compliance. The solution is legislation that allows for transparent and fair road rules, not litigation. In the meantime, we will continue to operate as usual.

Others:

Report: If the SEC targets Coinbase’s cryptocurrency token trading and staking services, the company’s net income will be at risk for at least 37%.

Alabama State Regulator: Coinbase’s staking program violates state securities law.

New Jersey State Securities Division: Fined Coinbase $5 million.

Ten states in the US have taken legal action against Coinbase for violating securities laws, including Illinois, Vermont, Alabama, Kentucky, California, Maryland, Wisconsin, Washington, New Jersey, and South Carolina.

Nansen Data: In the past hour, since the SEC filed a lawsuit against Coinbase, except for Bitcoin, Coinbase users’ net outflow on multiple chains is about $57.7 million, of which $43.1 million comes from Coinbase Custody.

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SEC vs. Binance:

SEC: Binance.US transferred at least $145 million to an entity account controlled by Zhao Changpeng, and CZ personally received $62.5 million from one of Binance’s bank accounts between October 2022 and January 2023. To evade US regulation of CZ, Binance, and the Binance website, CZ and Binance established BAM Management and BAM Trading in the United States, and publicly claimed that these entities independently controlled the operation of the Binance US platform. BAM Trading and BAM Management controlled by CZ and Binance lied to investors about the control measures they implemented on the Binance US platform, raised approximately $200 million from private investors of BAM Management, and attracted billions of dollars in trading volume from investors who wanted to trade on the Binance US platform, including retail and institutional investors. CZ is the actual owner of Sigma Chain, the market maker for Binance, which is operated by multiple Binance employees. The SEC has removed the resume of its former official and key figure in the Ripple lawsuit, Hinman, from its official website. Hinman stated at the 2018 FinTech Week conference that selling ETH does not constitute a “securities transaction.”

Binance.US: The SEC’s lawsuit is unfounded and we will actively defend ourselves, stating that the SEC’s lawsuit is “unreasonable based on facts, law, and its own precedents,” and will seek congressional intervention to create a viable regulatory system for digital assets through bipartisan legislation. Additionally, Binance.US stated that it has been in sincere contact with the SEC for the past two and a half years, and our goal has always been the same: to actively cooperate and develop a clear, practical regulatory framework that allows companies like us to grow and create jobs and provide safe access to digital assets for American consumers.

Binance has always responded proactively and cooperated with the SEC’s investigation, but the SEC has abandoned and refused to communicate, choosing to take unilateral action and file a lawsuit. The SEC’s unilateral designation of certain tokens and services as securities will only make these issues more complex, and Binance will do its utmost to defend the platform. Additionally, Binance stated that any allegations that user assets on the Binance.US platform have been at risk are incorrect, and all user assets on Binance and its affiliated platforms (including Binance.US) are secure, and Binance will actively defend against any unfounded allegations. Instead, the SEC’s actions seem to be aimed at rushing to gain jurisdiction from other regulatory agencies, rather than protecting investors as their primary task.

Zhao Changpeng:

The SEC’s lawsuit against Binance is an excellent opportunity for the industry to unite and develop a set of common sense rules and guidelines.

He launched a poll on social media asking “Who can better protect you? Binance or SEC,” with Binance currently having a 84.9% support rate and SEC only having a 15.1% support rate.

Others:

CCTV-2: The “Binance and its CEO were sued by the US Securities and Exchange Commission” was reported in the Prime Finance column.

US SEC Chairman Gary Gensler: Binance operates a “network full of deception and conflicts.” If cryptocurrency tokens have real value, the SEC is ready to work with the cryptocurrency industry to achieve compliance.

Nansen CEO: Calls for US SEC Chairman Gary Gensler to resign.

CFTC Chairman: Suggests that Congress take immediate legislative action to address the lack of regulation of digital assets.

Lookonchain data: Before the news of the US Securities and Exchange Commission (SEC) suing Binance came out, FBG Capital withdrew 35 million USDT from Binance and 9 million USDT from OKX, but after the news of the SEC suing Binance came out, FBG Capital deposited all 44 million USDT into Binance; there is a lot of FUD in the market due to the SEC’s lawsuit against Binance. However, some institutions, whales, and Smart Money seem to be buying at the bottom.

Huang Licheng: Has transferred all holdings of BAYC and MAYC to Binance to show support for Binance.

Data: Binance’s net asset outflow from 0:00 to 9:00 on June 6 was US$2.18 billion, accounting for about 4% of the platform’s total assets (US$54.33 billion); within 24 hours after the news of the US Securities and Exchange Commission (SEC) suing centralized cryptocurrency exchange Binance came out, the trading volume of decentralized exchanges (DEX) surged by 88%; the SEC’s lawsuit against cryptocurrency exchange Binance has caused fluctuations in the cryptocurrency market, and Coinbase’s stock has also been affected. According to US stock data, Coinbase’s closing price on Monday fell to US$58.7, a drop of 9.05%, a new low in June, and its current market value has also dropped to US$13.77 billion ; BTC fell below US$25,500, currently reporting US$25,490.2, with a daily drop of 4.81%.

June 7:

SEC and Binance:

SEC: Has requested the court to approve the freezing of assets related to Binance.US, Binance’s affiliated company BAM, and Zhao Changpeng, and issued a temporary restraining order.

Binance US: User asset security, the platform will continue to operate comprehensively, and deposit and withdrawal functions are normal. Released the Strong Together statement, calling for community unity.

Zhao Changpeng: If the restraining order is approved by the court, it will only affect Binance.US. Binance.com will not be affected and the funds are safe.

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SEC and Coinbase:

SEC: In wallets controlled and segregated by assets by Coinbase, the company controls and aggregates the encrypted assets of pledge plan investors, together with Coinbase’s own encrypted assets. Coinbase also pledges its own encrypted assets together with the assets of pledge plan investors, including as part of the same pledge pool of five protocols. In addition, Coinbase treats all encrypted assets submitted by investors and segregated according to eligible pledge assets as interchangeable assets.

Coinbase: The SEC and the Commodity Futures Trading Commission (CFTC) have made conflicting statements, and the SEC’s enforcement approach has harmed the United States’ interests.

Coinbase Chief Legal Officer Blockingul Grewal: It is disappointing that the SEC has decided to take legal action against Coinbase today, and after the SEC filed a lawsuit alleging violations of securities laws against Coinbase, a solution was proposed within a few hours to allow for fair and transparent rulemaking that is equally applicable, rather than litigation. Despite today’s complaint, we will continue to operate our business as usual.

Others:

US Court: Requires SEC to respond to Coinbase’s petition for rulemaking within a week; approves SEC’s request to freeze Binance.US’ assets.

Stock and cryptocurrency trading platform Robinhood: May delist tokens mentioned in the lawsuit filed by the US Securities and Exchange Commission (SEC) against Binance and Coinbase this week. Dan Gallagher, former SEC commissioner and Chief Legal and Compliance Officer at Robinhood, testified to the House Agriculture Committee on Tuesday, “We are actively reviewing the SEC’s analysis to determine what action, if any, to take in this regard.”

Justin Sun: At this challenging moment, I express my support for Coinbase and the entire crypto community.

Cryptocurrency law firm Gresham International: Advises crypto companies not to do business in the United States, as US regulatory policies have become unpredictable, which indicates that cryptocurrencies are unwelcome, even for those who are trying to comply with the rules.

a16z Policy Director: The SEC should work with cryptocurrency companies.

Bloomberg: Coinbase faces a life-and-death test in its legal battle with the SEC, and the SEC’s enforcement push is particularly unfavorable to Coinbase, which generated more than 80% of its revenue from the United States last year and now faces near-death threats to its business model.

Timothy Massad, former chairman of the CFTC: The future of cryptocurrencies will depend on the outcome of the recent lawsuits filed by the government against cryptocurrency exchanges Binance and Coinbase.

Bernstein: The core of the SEC’s allegations against Binance and Coinbase is whether cryptocurrency tokens are securities or commodities.

According to the Bloomberg Billionaires Index: Over the past two days, Binance CEO Changpeng Zhao’s net worth has dropped by $1.4 billion to $26 billion, while Coinbase CEO Brian Armstrong’s net worth has dropped by $361 million to $2.2 billion.

US Treasury Secretary Yellen: Supports regulatory oversight of cryptocurrencies by US regulatory agencies.

Ripple CEO: The SEC’s lawsuit against Binance and Coinbase is an attempt to divert attention from their inaction on the FTX issue.

NBA Dallas Mavericks owner: The SEC ignores financial fraud on Twitter but sues Coinbase.

South Korean Financial Services Commission: Postpones the registration of Binance’s acquisition of GoBlockingx’s business change.

Coinbase stock price: Falls below $50, with a market value that has shrunk by $2 billion since yesterday.

Binance.US coin price: Bitcoin has a premium of nearly $400, and the Bitcoin premium on Binance.US may indicate that users are trying to transfer their assets to the most important cryptocurrency to immediately withdraw them.

Lookonchain monitoring: After news of the SEC’s lawsuit against Binance and Coinbase, Cumberland withdrew 20,000 ETH (about $37 million) from Coinbase and 4,850 ETH (about $9 million) from Binance, for a total of 24,850 ETH.

Two US senators: Criticize the Securities and Exchange Commission’s (SEC) lawsuit against cryptocurrency exchange Coinbase.

Republican Congressman Hill: The Binance case shows that cryptocurrencies need clear (regulatory) rules and frameworks, and is developing digital asset legislation to bring clarity.

US Bank: After the SEC launched a legal battle against cryptocurrency exchanges, Coinbase faces more and more regulatory challenges.

Nasdaq CEO: Is assisting the US Financial Industry Regulatory Authority and the SEC in their enforcement actions against Coinbase’s lawsuit.

June 8:

SEC: The SEC has approved modifications to securities regulations, deleting and replacing references to credit ratings from existing exceptions in sections 101 and 102 of the M Regulation, which prohibits activities that may artificially affect the securities market. In 2021, Binance transferred nearly $20 billion in mixed funds to a foreign subsidiary of Blockingxos.

The US Securities and Exchange Commission (SEC) has requested that Binance CEO CZ appear in a federal court in the District of Columbia, with CZ stating that this is just part of the SEC compliance process. He doesn’t need to appear in person, but must respond within the prescribed time frame.

SEC New Court Documents: CZ and Guangying Chen have issues with mixing platform and private funds.

Binance:

Binance.US Announcement: Will delist some trading pairs and pause OTC trading.

Binance.US update on delisting: Will not delist any USDT-related trading pairs

Zhao Changpeng: Confirmed receiving a subpoena from a US court, but no need for me to appear in person, no need for FUD.

Binance Lawyer: Due to SEC Chairman Gensler’s initiative to serve as a Binance adviser, it has requested that he recuse himself from any actions involving Binance.

Coinbase: Operating as usual, no customer run risk, not giving up staking business; Coinbase and Binance are completely different, and the litigation is completely different: Coinbase has no allegations of misappropriation of customer funds, nor has it been named in the lawsuit. Coinbase is based in the United States and has never operated anything related to hedge funds or trading with clients. All financial statements are audited; Gensler’s views do not represent the US government.

Coinbase Chief Legal Officer: Coinbase has not made any decision to delist assets.

Coinbase CEO: Last meeting with SEC Chairman was cold.

Others:

US Treasury Secretary Yellen: SEC’s action is appropriate.

Coingraph News: News that the US SEC’s freeze on Binance.US-related assets application was approved by the court yesterday has not been confirmed.

Binance.US: Multiple currencies are trading at a premium, with BTC exceeding $28,000.

Manta Network Co-Founder and COO Kenny: Gary Gensler sent a report he wrote about BNB to CZ and encouraged Kenny to participate more in encryption.

CoinShares Research Director: Regulatory certainty will be a key factor for digital asset participants.

Ark Invest CEO Cathie Wood: Coinbase can benefit from the US Securities and Exchange Commission’s (SEC) scrutiny of Binance.

Dune@21Shares data: Since the SEC took enforcement action against Coinbase on June 6, 35,810 cbETH have been redeemed, worth about $65.7 million.

June 9:

SEC: Requests court to allow “alternative service” to serve documents to Binance and Changpeng Zhao.

Binance US: Will suspend USD deposits, its banking partner plans to suspend USD withdrawal channels on June 13.

Changpeng Zhao: User funds will never leave the Binance.US platform unless the user actively chooses to exit; denies receipt of $1.2 billion in Binance.US user funds.

Coinbase: Chief Legal Officer believes the SEC misread the law.

Others:

SEC Chairman Gensler: Comply with the rules, or you may also be sued; crypto securities issuers need to register their investment contract offers and sales with the SEC or meet exemption requirements; most crypto tokens pass the investment contract test, and most crypto intermediaries must comply with securities laws.

Senators Elizabeth Warren (D-MA) and Chris Van Hollen (D-MD): Request DOJ to investigate Binance for allegedly lying to lawmakers.

US Senator Bill Hagerty of Tennessee: Recent SEC actions may be aimed at paving the way for CBDC issuance.

Animoca Co-founder and Chairman Yat Siu: The SEC’s focus is on the US.

Crypto investment firm Galaxy Digital: Is accelerating its move overseas, with CEO Mike Novogratz saying the regulatory environment makes the crypto market a difficult place.

Rating agency Moody’s: Confirms cryptocurrency trading platform Coinbase’s rating as B2, senior unsecured rating as B1, and changes outlook from stable to negative.

Protocol Labs: Filecoin is not a security.

Cardano Development Company: ADA should not be classified as a security by the SEC under any circumstances.

US House Financial Services Committee: Releases draft stablecoin regulation proposal.

Data: Coinbase CEO sold $1.8 million worth of stock before the SEC filed suit.

Rumor: The SEC may list Crypto.com as its next target for prosecution.

June 10:

Binance:

Zhao Changpeng: The net outflow of assets from Binance in the past 24 hours is about $392 million.

Other:

Insiders: The SEC’s lawsuits against Binance and Coinbase could impact the US legal and political system for years to come.

Data from blockchain analysis firms Nansen and Glassnode: About $4 billion flowed out of Binance, Coinbase, and Binance.US after the SEC’s enforcement actions.

US Senator Cynthia Lummis: Strongly opposes the SEC’s legal action against Coinbase.

Traders: Before the SEC filed suit against Binance, traders initiated tens of millions of dollars in BNB sell orders.

Glassnode data: After the US Securities and Exchange Commission (SEC) sued Binance and Coinbase, the realized losses of Bitcoin holders in the past four days of this week reached $798 million, exceeding realized profits. The realized loss on June 5 was higher, indicating that the SEC’s lawsuit against Binance can cause more selling than its lawsuit against Coinbase.

Kaiko: The bitcoin price spread for Binance.US is about 20 times higher than that of Coinbase and Kraken.

US lawyer Brian Frye: The SEC lawsuit may lead to the closure of Binance in the United States, while Coinbase’s situation is more optimistic.

Polygon founder: Responding to the suspicion that MATIC has been recognized as a security by the SEC, it is believed to be temporary noise and will continue to be built.

June 11:

Coinbase CEO: Coinbase has shared its listing review framework with the SEC; will not give up on developing in the United States and looks forward to a change in policy direction after the election; trading in crypto commodities does not require the multiple registrations mentioned in the lawsuit by the SEC.

Other:

Founder of SEC Internet Law Enforcement Office: Cryptocurrency platforms will face a new round of regulatory attacks.

Former head of SEC web department: It is quite unfair for the SEC to choose tokens for prosecution.

Solana Foundation: Disagree with the SEC’s classification of SOL as a security.

Fortune: Legal experts believe that the SEC is likely to bring criminal charges against Binance; the US Department of Justice may delay its lawsuit against Binance due to ongoing settlement negotiations.

June 12:

Coinbase: CEO believes that the US cryptocurrency industry needs clear regulation.

Other:

Registered investment adviser Yusko: The SEC’s regulatory attack on Binance and Coinbase has exceeded the bounds of due process.

Ripple’s general counsel: The US Securities and Exchange Commission is hypocritical.

Gemini co-founder Cameron Winklevoss: The anti-crypto war by the SEC chairman and others will lead to the defeat of the Democratic Party in the 2024 presidential election.

Circle CEO: If regulation eventually involves stablecoins, it will put them in a leading position.

Former SEC lawyer John Reed Stark: Urges users to withdraw assets from cryptocurrency platforms.

Defillama data: In the past 7 days, Binance has had a net outflow of $3.38 billion.

JPMorgan: The SEC’s crackdown on cryptocurrencies has increased the urgency for lawmakers to formulate regulatory frameworks this year.

Data: Since the SEC lawsuit, the market depth of Binance.US has decreased by 78%.

June 13:

SEC: Former director of SEC Internet Law Enforcement Office: The US Department of Justice will bring or has brought criminal charges related to Binance.

Binance:

Binance US: The SEC’s move to seek asset freezes will put the company in trouble; hired a former co-director of the SEC’s enforcement division to defend itself.

Lawyer representing BAM Trading, the parent company of Binance.US: Zhao Changpeng has a bank account with BAM Trading but does not have signing authority.

Coinbase:

Coinbase’s Vice President of International Policy: Preparing to build in Abu Dhabi and Canada.

Other:

SEC Chairman Gary Gensler: Disliking regulatory information does not mean he did not receive it.

U.S. Congressman Warren Davidson: Introduced a bill to dismiss SEC Chairman Gensler.

Former SEC Chairman Jay Clayton: Cryptocurrency and blockchain are just technologies, and it is indisputable that incorporating them into the financial system is the way to go.

0xScope data: Binance’s net inflow in the past 24 hours was $477 million.

SEC Chair: Satoshi Nakamoto’s innovation has driven the development of crypto assets and underlying blockchain technology.

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