SEC chair Gary Gensler, in a recent interview on CNBC, raised alarm over the alleged non-compliance of leading cryptocurrency exchanges, Binance and Coinbase, with U.S. securities laws.
In a recent appearance on CNBC’s Squawk Box, Securities and Exchange Commission (SEC) chair, Gary Gensler, voiced concerns regarding the alleged non-compliance of popular cryptocurrency platforms, Binance and Coinbase, with U.S. securities laws.
These platforms are currently facing lawsuits filed by the SEC, accusing them of operating as unregistered securities exchanges.
Gensler emphasizes his belief that these cryptocurrency exchanges have been sidestepping U.S. regulations for some time now, hinting that this is nothing new. He pointed to “a lack of controls, deception, and conflicts,” accusing the business model of these platforms to be built on a foundation of non-compliance.
Gensler is urging these entities to rectify their regulatory status, instead of playing a metaphorical game of ‘catch me if you can.’
The SEC chair highlighted specific allegations against Binance CEO, Changpeng Zhao, of merging customer funds with those of his trading firm, Merit Peak Limited. This was cited as a case in point for why increased scrutiny over crypto exchanges is crucial.
Binance has vehemently denied these claims.
While Gensler’s comments targeted Binance more frequently, he did imply that users should be wary of leaving their funds on platforms such as Binance. He maintained that storing funds and crypto securities on such platforms could not be considered “proper custody.”
Moving to the topic of the value of various crypto tokens, Gensler acknowledged that there are ongoing debates about their utility. Host Jim Cramer brought up queries regarding the value of specific coins listed in the Binance complaint, but Gensler remained steadfast in his view.
He emphasized that we already have digital currencies in the form of the U.S. dollar, the euro, and the yen, questioning the need for additional digital currencies.
However, Gensler didn’t completely reject the possibility of a future where crypto exists alongside fiat currencies. He proposed that if the crypto tokens truly hold value, compliance would foster trust, potentially leading to a shift in the business model for crypto exchanges.
Gensler affirmed that the SEC’s recent actions were not anti-innovation, countering Binance’s accusation that the SEC was jeopardizing America’s global financial leadership. Instead, he insisted that the SEC’s approach fostered innovation, as trust is a fundamental pillar of capital markets.
While he refrained from divulging specific communications between the SEC and the implicated companies, Gensler emphasized his commitment to ensuring proper compliance across all crypto exchanges. The SEC’s objective in court, he stated, is to establish that even a single crypto token should be properly registered as a security.
This isn’t the first time Gensler has made headlines, as the SEC has been increasingly vigilant in its enforcement against crypto companies. When questioned by Congress in April, Gensler abstained from categorizing ether as either a security or a commodity.