U.S. Securities Exchange Commission (SEC) Chair Gary Gensler is “very confident” of winning enforcement cases against Coinbase and Binance
Speaking to CNBC, Gensler said it’s up to people what they want to invest in. However, the law clearly states that service providers must adequately disclose their products and services, he said.
“Without that proper disclosure, the public can’t answer the question as to whether it’s just, as you say, counterfeiting, or it’s a scam, or something else.”
Gensler added that without appropriate discloses, investors are “just chasing after something,” which is worsened in an industry filled with “hype, and hucksters and fraudsters.”
Commenting on the SEC’s chances of winning its suits against Coinbase and Binance, Gensler pointed out that both platforms offer hundreds of tokens to trade, and the agency needs to prove just one token is an unregistered security.
“All we have to show is that one of them is a security and that they should be properly registering and having rulebooks against fraud, manipulation as an exchange, broker, and alike… And we’re very confident in this.”
SEC sues Coinbase next day after suing Binance
On June 6th, the SEC filed legal action against Coinbase for operating as an unregistered broker, exchange, and clearing house since 2019.
The SEC alleged that the company’s Prime and Wallet services breached applicable securities laws. The Staking Program was also mentioned as “depriving investors of material information about the program,” violating the Securities Act of 1933.
“Coinbase has for years defied the regulatory structures and evaded the disclosure requirements that Congress and the SEC have constructed for the protection of the national securities markets and investors.“
Per the Coinbase filing, the SEC listed several cryptocurrencies as unregistered securities, including, but not limited to, SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO.
In March, Coinbase said it received an SEC Wells Notice informing of pending prosecution. The company launched an international exchange for non-U.S. institutional clients in May – suggesting a changing focus outside the U.S.
The Coinbase enforcement action comes one day after Binance was sued for operating as an unregistered exchange, broker, and clearing house and misrepresenting trading controls, among other allegations.