SEC sues top crypto firms in consecutive days

Coinbase most recently

On Tuesday, the SEC accused Coinbase of performing the functions of a securities exchange, broker and clearing agency ― entities that have expansive reporting requirements ― since at least 2019. The lawsuit, filed in U.S. District Court for the Southern District of New York, asked for unspecified civil penalties along with the forfeiture of any ill-gotten gains, as well as a permanent injunction from violating SEC rules.



“Coinbase’s alleged failures deprive investors of critical protections, including rule books that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC,” the commission’s chairman, Gary Gensler, said in a statement.




Kevin Drum's take on the Binance suit:

Well, the other shoe dropped today in a landmark SEC lawsuit against Binance and its founder, Changpeng Zhao:

The SEC said that Binance and Zhao misused customers’ funds and diverted them to a trading entity that Zhao controlled. That trading firm, Sigma Chain, engaged in manipulative trading that made Binance’s volume appear larger than it actually was, the SEC said.

Binance also concealed that it commingled billions of dollars in customer assets and sent them to a third-party, Merit Peak, which was owned by Zhao, the SEC alleged.



Even if you think that crypto is inherently a scam, as I do, it's not the case that crypto trading has to be a scam. You can be a true believer and run an honest platform that allows people to buy and sell products that I happen to think are worthless.

And yet crypto seems to attract Ponzi-like corruption the way shit attracts flies. The problem, I assume, is that an honest crypto platform isn't very profitable. You can make some money, but worthless products just don't generate large fees or commissions. To make serious money, you need to convince people that crypto isn't just real, but an unstoppable juggernaut that only the select few truly understand. And the only way to do that is by running a corrupt platform that's designed to look much bigger and richer than it really is. Reality on its own is just too drab to keep the marks on the hook.


SEC sues world’s biggest crypto firm over commingling and diversion of customer funds - Kevin Drum

 

I have no particular subject matter expertise but I usually agree with Kevin Drum. But it's possible he's wrong on this one