Crypto - A security or something else?

Crypto is at a crossroads. As exchanges and currencies blow up, the US Securities and Exchange Commission is ready to step in. 

The SEC is on the verge of regulating crypto. But first, America has to decide, again, what a security really is.

Is crypto a security, like a stock? Or a tradable item of speculation, like a Beanie Baby? 

Robert Armstrong and Ethan Wu argue about the benefits and risks of regulating crypto.

Check out thus "Behind the Money" podcast HERE.

SEC Suits Against Binance And Coinbase Rock The Crypto Industry

Steven Ehrlich, the director of research for Forbes Digital Assets, joins "Forbes Talks" to discuss the state of the crypto market and his conversation with Coinbase's chief legal officer amid the SEC lawsuits.

The SEC Comes For Crypto!

This week, the US Securities and Exchange Commission (SEC), filed lawsuits against Binance and Coinbase, two of the world’s biggest crypto exchanges, on which investors buy and trade a large offering of cryptocurrencies. 

The SEC’s main allegation against Coinbase is that it’s running an unregistered securities exchange — like if the Nasdaq independently operated without any regulatory oversight. Binance faces the same charge, as well as additional accusations that it appropriated billions of dollars in customers’ funds for its CEO’s trading firm, misled its customers, lied to regulators, and more. 

Binance is accused of moving money from the US business to pay for a Yacht for the exchange founder Changpeng Zhao.

How will regulation affect America's crypto industry?

On June 6th the Securities and Exchange Commission sued Coinbase, the US’s largest crypto exchange, for failing to register as a broker, exchange or clearinghouse of securities. When markets opened, Coinbase’s share price dropped by a fifth.

The day before the SEC had sued Binance, the world’s largest crypto exchange—alleging both that it offered securities-trading services without the necessary registrations, and that it had placed customer funds in a trading outfit owned by its boss, Changpeng Zhao. Binance rejected all the allegations and said it would “vigorously defend” itself.

At the core of both lawsuits is the idea that many cryptocurrencies are in fact securities. American law defines securities to include any “investment contract” that produces an asset for which an owner can expect to accrue returns depending on the effort of a promoter.

So, how will this affect the US crypto industry? Read the full article HERE.

Crypto frenzy is rife with ‘hucksters, fraudsters, scam artists’

The current crypto frenzy is “reminiscent of what we had in the 1920s before the federal securities laws were put in place,” said U.S. Securities and Exchange Commission Chairman Gary Gensler. He went on to add that “... Hucksters. Fraudsters. Scam artists. Ponzi schemes. The public is left in line at the bankruptcy court.”

“The crypto securities markets should not be allowed to undermine the well-earned trust the public has in the capital markets,” Gensler said. “The crypto markets should not be allowed to harm investors.”

The SEC this week brought separate actions against Binance and Coinbase, alleging they had unlawfully offered securities intermediation functions without registering them with the regulatory agency. The agency also alleged Coinbase commingled its exchange, broker-dealer and clearinghouse functions. The SEC also accused Binance of commingling investors’ assets.

Read the full article HERE.

Cybercrime Rising on Telegram? & SEC Seeks Crypto Regulation

Boom Bust - New reports from the Financial Times and Cyberint have shown that cybercrime is on the rise on the encrypted messaging platform Telegram. Boom Bust's Ben Swann brings us up to speed on the investigation and what it means for the service. (1:01) Then we turn to the ongoing labor shortage in the United States as the restaurant industry continues to bear the brunt of it. RT's Sayeh Tavangar brings us an on-the-ground report from the struggling sector. (6:28) And SEC head Gary Ginsler has called for greater control of the cryptocurrency industry this week on Capitol Hill. Boom Bust's Christy Ai and Jeffrey Tucker of the Brownstone Institute weigh in on the fintech's legal grey area. (16:21) 

 

SEC sets its sights on the crypto “Wild West”

"When Garey Gensler took over as the head of America’s Securities and Exchange Commission (SEC) in April, he might have seemed pretty crypto-friendly. Only months before he had taught a course on cryptocurrencies at the Massachusetts Institute of Technology; he has said that the innovation associated with bitcoin will be a “catalyst for change” in finance. Yet, speaking at the Aspen Security Forum on August 3rd, he probably dashed the hopes of crypto buffs. He signaled that he would seek tougher policing of the crypto-sphere, which he described as “rife with fraud, scams and abuse”."

 

So writes The Economist in a recent edition.  

Read the full article HERE.

Regulators Probe Market Amid Rising Meme Stocks

Market swings and the surging prices of meme stocks have caught the attention of the U.S. Securities and Exchange Commission (SEC), Bloomberg reported on Monday (April 7). The SEC is doing a deep dive into the markets for evidence of manipulation and other improper behavior in light of escalating meme stocks like AMC and GameStop.

Compliance professional charged with insider trading

Goldman Sachs compliance staffer charged with insider trading

From Finextra –

“A former Goldman Sachs staffer has been charged by the Securities and Exchange Commission with making nearly half a million dollars by stealing non-public information from the bank's email system and using it to make illegal trades ahead of client mergers.”

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Not just a compliance program, but an effective compliance program: SEC, DOJ issue strong reminders

From JD Supra Business Advisor -

“In recent days the Department of Justice and the Securities and Exchange Commission have issued strong messages reemphasizing the importance of effective corporate compliance programs.

Assistant Attorney General Leslie R. Caldwell, speaking at the 10th Annual Compliance week conference in Washington, DC last week, stressed the necessity for companies to design compliance programs “that don’t just look good on paper, but actually work.”

Caldwell warned that although a risk-based approach to compliance may be appropriate, companies “often misdirect their focus to the wrong type of risk,” resulting in reactive, rather than proactive, compliance programs. An effective compliance program, Caldwell says, is “tailored to the unique needs, risk and structure” of the company and focuses on the company as a whole, rather than just those lines of business subject to regulation.”

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Bitcoin lacks 'credibility and trust' says SEC

From PC World

“The U.S. Securities and Exchange Commission is leery of bitcoin.

The agency issued a lengthy warning to investors on Wednesday about risks it sees in bitcoin and virtual currencies, much of which has been already iterated by bitcoin advocates or other regulators.

But the SEC, which is the top regulator for U.S. securities markets, also took a dig at bitcoin’s short existence as another negative.

“As a recent invention, Bitcoin does not have an established track record of credibility and trust,” the agency wrote in its advisory.

The statement perhaps conflates the pure technology of the bitcoin protocol that transfers the virtual currency, which has been vetted by cryptography experts as solid, with the nearly innumerable thefts, scams and failures of bitcoin-related businesses.

Bitcoin, which launched in 2009, has seen a fair share of challenges, including vacillating exchange rates and regulatory restrictions in countries such as China.”

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