SEC And Crypto Assets – What We Know So Far

The United States Securities and Exchange Commission (SEC) is an independent federal agency enacted based on the Securities Exchange Act of 1934 and headed by five Commissioners. 

The current SEC Chair is Gary Gensler. As a federal agency, the SEC is established to set and enforce the right rules in governing US securities markets and participants. The SEC is one of the prominent regulators in the US crypto industry.

Over the years, the SEC has indicated several enforcement actions in the crypto space, creating tension and pressure on crypto firms and assets. We’ll look into the activities of the SEC and their impact on the global crypto industry so far.

The Commission has the mission: “To protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

SEC’s Enforcement Actions And Lawsuits On CryptoAssets

The US SEC has shown increasing enforcement actions and lawsuits in the crypto space over the years. Here are some notable SEC enforcement actions and lawsuits in the crypto industry.

• Lawsuit Against Ripple 

The US SEC sued the San Francisco-based blockchain firm Ripple Labs and some of its executives on December 2020. The regulator alleged that Ripple has been selling its crypto token, XRP, which is unregistered securities.

The lawsuit against Ripple is still an open court case within the US Southern District Court of New York. As the defendant, Ripple stated that XRP is not a security, citing the Hinman Speech documents as strong evidence. However, SEC filed a motion to keep the speech documents sealed.

The court finally denied the SEC’s motion on May 16, stating that speech documents could influence the ruling of the case. Today June 13, the Hinman document has been released to the public, causing a buzz in the industry. 

• Penalty against Kraken 

In February 2023, the SEC slammed a penalty on the Kraken crypto exchange. The regulator charged Payward Trading Ltd and Payward Ventures Inc., both known as Kraken, for offering and selling its crypto staking program.

In compliance with the settlement terms, Kraken agreed to halt its crypto staking program. Also, the crypto exchange agreed to pay a fine of $30 million to the SEC.

• Lawsuit Against Binance

On June 5, the US SEC sued the world’s largest crypto exchange, Binance, and its CEO, Changpeng Zhao. 

According to the lawsuit filed in a US federal court, the regulator alleged that the defendants violated the US securities laws by selling unregistered crypto assets, which are securities.

SEC’s charges against Binance expanded the range of crypto assets it placed on the securities class to include Cardano, Solana, Polygon, BNB, and others.

Among its numerous charges, the SEC also accused Binance of allowing its US customers to trade on the international platform Binance.com instead of the subsidiary Binance.US.  It stated that the exchange had no regulatory clearance to do so.

• Lawsuit Against Coinbase

On June 6, the SEC filed a lawsuit against the US largest crypto exchange, Coinbase, in Manhattan federal court. Recall that before the recent lawsuit, the SEC issued a Well Notice to Coinbase earlier. 

The Commission charges Coinbase for operating as an unregistered securities broker through its offering of some unregistered crypto coins, which are securities.

Impact Of SEC’s Recent Crackdown On Crypto

Firms could either opt for settlements or decide to proceed with legal battles with the SEC when faced with regulatory actions.

Both Binance and Coinbase have indicated the decision the face the SEC head-on on the lawsuits. However, the broader crypto space is under tension with the recent crackdown from the SEC. 

The cumulative crypto market cap has dipped by 7.08% over the past 7 days and is currently at $1.06 trillion. Further, a majority of the crypto assets have lost a considerable amount of their value in the past 7 days. 

According to data from CoinMarketCap, ETH, ADA, BNB, TRX, MATIC, and SOL dipped by 3.88%, 18.46%,12.15%, 8.36%, 17.94%, and 21.44%, respectively.