Leah Montebello For The Daily Mail<\/a> <\/p>\n Published:<\/span> 16:51 EDT, 6 June 2023 <\/time> <\/span> | Updated:<\/span> 16:51 EDT, 6 June 2023 <\/time> <\/span> <\/p>\n
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The crypto world plunged deeper into crisis yesterday as US regulators targeted two of the world\u2019s largest exchanges.<\/p>\n
In a move that sent shockwaves through the industry, the Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase over claims the trading platform was operating illegally in the country.<\/p>\n
The case against Coinbase came just a day after the SEC accused Binance and its boss of \u2018an extensive web of deception\u2019 and \u2018calculated evasion\u2019 of US laws.<\/p>\n
The two companies together account for around half of global trading in digital assets such as bitcoin.<\/p>\n
The cases represent a widening crackdown on the crypto industry, which SEC chairman Gary Gensler has branded a \u2018Wild West\u2019 for investments.\u00a0<\/p>\n
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Allegations: The US Securities and Exchange Commission has filed a lawsuit against crypto exchange Coinbase over claims the trading platform was operating illegally in the country<\/p>\n<\/div>\n
For Coinbase, the SEC alleges bosses were \u2018fully aware\u2019 that its business was subject to securities laws, including registering as a broker and exchange, but decided to ignore it.<\/p>\n
\u2018Coinbase\u2019s 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,\u2019 Mr Gensler said.<\/p>\n
The Wall Street regulator has also launched an attack on the world\u2019s largest crypto currency exchange, Binance.<\/p>\n
On Monday, the SEC sued the firm and its founder Changpeng Zhao, accusing it of mishandling customer funds, inflating trading volume on the site and taking steps to dodge US regulation.<\/p>\n
The complaint claims Binance secretly commingled \u2018billions of dollars\u2019 of customers\u2019 assets and sent them to a third party, Merit Peak Limited, which is owned by Zhao.\u00a0<\/p>\n
Outlining 13 civil charges, Gensler said: \u2018We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law.\u2019<\/p>\n
The regulator accused Zhao of seeking to enrich himself with little regard for his investors.<\/p>\n
\u2018We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk \u2013 all in an effort to maximise their own profits,\u2019 said Gurbir Grewal, director of the SEC\u2019s enforcement division.<\/p>\n
Regulators have been on red alert after a string of high-profile collapses wiped out more than a trillion dollars from crypto\u2019s market capitalisation last year.\u00a0<\/p>\n
The collapse of FTX in November was the biggest of these failures, sparking a cryptocurrency rout and leaving an estimated one million creditors facing losses of billions of dollars.<\/p>\n
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Arrest: Disgraced FTX founder and chief exec Sam Bankman-Fried (pictured) is facing 13 charges including fraud and money laundering as well as foreign bribery<\/p>\n<\/div>\n
Disgraced FTX founder and chief executive Sam Bankman-Fried is facing 13 charges including fraud and money laundering as well as foreign bribery.\u00a0<\/p>\n
He has denied all charges against him and is under house arrest at his parents\u2019 home in California until trial later this year. Analysts have said the crypto world is still feeling a hangover from the FTX drama.<\/p>\n
\u2018The robust language used by the SEC, along with the lengthy list of charges, suggests this latest fiasco to engulf the crypto market is going to rumble on for some time,\u2019 said Laith Khalaf, head of investment analysis at AJ Bell.<\/p>\n
\u2018At the moment it feels like the crypto bubble is suffering death by a thousand punctures.\u2019<\/p>\n
In a response to the news of the lawsuit against Binance, its boss Zhao wrote on Twitter: \u2018Our team is all standing by, ensuring systems are stable, including withdrawals and deposits. We will issue a response once we see the complaint. Haven\u2019t seen it yet.\u2019<\/p>\n
He claimed Binance\u2019s \u2018size and global name recognition\u2019 meant it has become \u2018an easy target now caught in the middle of a US regulatory tug-of-war\u2019.<\/p>\n
Binance has over 100m customers across the world and the founder accused the SEC of lodging the suit just to \u2018make headlines\u2019.<\/p>\n
Coinbase chief legal officer Paul Grewal said: \u2018The SEC\u2019s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America\u2019s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance. The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation.<\/p>\n
\u2018In the meantime, we\u2019ll continue to operate our business as usual.\u2019<\/p>\n