All US (and Binance) Crypto Exchanges Under SEC Investigation, Says Senator Lummis Staffer

According to a staff member in the office of US Senator Cynthia Lummis (R-WY), widely publicized reports that the US Securities and Exchange Commission (SEC) is investigating the $ 20 billion cryptocurrency exchange Coinbase are not just the tip of the iceberg. The staff member says all U.S. exchanges – and the world’s largest cryptocurrency exchange, Binance – are in various stages of investigation. There are over 40 cryptocurrency exchanges in the United States, according to crypto data site CoinGecko. The SEC did not respond to multiple requests for comment.

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Following a series of SEC actions affirming the regulator’s dominance over the cryptocurrency industry and an equally strong response from the US Commodity Futures Trading Commission (CFTC) rejecting what she calls “regulation. through enforcement, “the staff says the SEC urgently wants to resolve the dispute with the CFTC over the jurisdiction of cryptocurrencies. If the problem is not resolved internally, he says lawmakers should be involved and Congress is likely to side with the CFTC.

In 2014, long before ethereum and almost all cryptocurrencies other than bitcoin and its early imitators, the CFTC asserted jurisdiction over what it then called “virtual currencies”. Then, in 2018, a federal court gave the CFTC jurisdiction to prosecute fraud cases involving virtual currency, according to a CFTC statement. Likewise, the SEC has repeatedly stated that bitcoin is a commodity. And in June 2018, SEC Director William Hinman said in a speech that he did not believe Ethereum was a stock, implying that it could be under the jurisdiction of the CFTC.

Evidence that the situation could change began to appear in June when SEC Chairman Gary Gensler hinted that Ethereum was a stock when he said bitcoin was the only crypto asset that was convenient to call a commodity. It should be noted that while Ethereum itself was not included in the list of nine assets, the SEC said it was a security in its insider trading allegations against former Coinbase employee, his brother and friend, the SEC specifically mentioned. that each of the assets were created on the Ethereum blockchain.

Perhaps selfishly, the source described the conversations between the SEC and the CFTC as not particularly fruitful, arguing that the final decision on who gets which authority will likely fall into the hands of lawmakers.

Yesterday, US Senators Debbie Stabenow (D-MI), chair of the Senate Committee on Agriculture, Nutrition and Forestry, and Senior Member John Boozman (R-AR), introduced the Environmental Protection Act of 2022. Consumer protection of digital products to be given to the CFTC new powers to regulate digital products. Senator Lummis herself co-sponsored with Senator Kirsten Gillibrand (D-NY) the Responsible Financial Innovation Act, a bipartisan legislative proposal for the regulation of digital assets of even greater scope.

Ironically, Senator aide Lummis gives both projects less than a 50 percent chance to pass this year. The only way either bill would pass this year is if a catastrophic Black Swan event, such as the crash of a major US stock market, could mobilize lawmakers, he says. The cryptocurrency bill most likely to come out before the end of the year is the recently delayed stablecoin bill outlining how banks could be allowed to issue their own stablecoins, which the source says could be attached to the supply bill from the end of the year.

A senior executive at a major cryptocurrency exchange also said in the background that based on rumors he is hearing from SEC members, many U.S. cryptocurrency exchanges have likely received Wells alerts used to officially notify companies when a stock is about to take place. to be brought against them. , and that most are under investigation. Binance.US unlisted one of the assets listed by the SEC earlier this week.

The executive said these instances are separate from the standard procedure the SEC conducts on a regular basis, for example, asking exchanges if they have had any communications with the team that created a newly listed asset, are in contact with any person who raises funds for the new asset listing or if the team has already made statements about how the token could gain value.

The executive also says the SEC has never inquired about bitcoin forks such as litecoin, but based on recent comments to the House Allocation Committee that bitcoin “could” be a commodity, which may change soon.

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