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Recent moves by Saudi Arabia, Russia and China have raised fears that the U.S. dollar could lose its preferred status for oil trading. And yet alternative national currencies aren’t that appealing. Could a Bitcoin-like currency do better?

The U.S. Securities and Exchange Commission was seeking to freeze assets on Binance.US after suing the exchange and its global sister-entity Binance, CoinDesk reported Tuesday.

Soros Fund Management CEO Dawn Fitzpatrick is bullish on crypto, even with the recent headwinds including the U.S. Securities and Exchange Commission suing trading platforms Binance and Coinbase amid a prolonged downturn.

“Crypto is here to stay,” she said during a Bloomberg investment summit. “What’s happened is clearly a setback. But right now I actually think it’s a huge opportunity for the incumbent financial firms to actually take the lead.”

Fitzpatrick said she expects established financial firms take over as investor confidence in some platforms wanes. She also alluded to the fact that average consumers and traders would likely benefit from such a shift as traditional institutions “segregate client assets” properly.

The CEO admitted there is some irony to the idea of traditional financial firms taking the lead in a market meant to be defined by disruption, decentralization and the emergence of new institutions. But Fitzpatrick said that crypto development, to this point, has been partly mismanaged.

“Especially the headlines of the last couple days, it’s clear these crypto native platforms would have benefitted from having an adult in the room,” Fitzpatrick said. “There are just long-held and simple norms about how you treat customer assets.”

The SEC alleges that Binance lied to customers and misdirected capital to separate investment funds owned by its CEO, while the agency is suing Coinbase on accusations of violating securities laws.

Fitzpatrick’s Soros Fund Management is an investment firm that handles a “pool of capital” that is largely owned by billionaire George Soros and valued at nearly $30 billion, the CEO said on Wednesday.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance.US, the U.S. entity of crypto exchange Binance, will delist around 100 trading pairs on June 8. That’s nearly a third of its current trading pairs.

The exchange said it will also pause its OTC Trading Portal, an “over-the-counter” trading system that lets buyers and sellers trade without using a public order book.

The move comes after the U.S. Securities and Exchange Commission sued Binance on June 5, alleging that the firm engaged in violations that should bar it and CEO Changpeng ‘CZ’ Zhao from further business operations in the U.S. 

The affected trading pairs include FLOW/USDT, APE/USDT, MANA/BTC and others.

“Your assets remain safe and secure with Binance.US, and deposits and withdrawals continue to function as normal,” the company said. 

 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

As the U.S. government’s fight against crypto intensifies, there is some evidence the industry is weathering it better than past shocks.

By striking a balance between privacy and identity verification, blockchains can realize their full potential and lure institutional money.

Coinbase CEO Brian Armstrong sought to differentiate the company from rival crypto exchange Binance after the U.S. Securities and Exchange Commission filed separate lawsuits against both firms this week.

“The companies could really not be more different, and the suits could not be more different,” Armstrong said on CNBC on Wednesday, according to an emailed transcript.

Armstrong noted that there had been no allegation of misappropriation of customer funds and said he had not been named personally in the suit. 

“The complaint in the Coinbase situation is really a technical matter about do you classify these as commodities or securities,” he continued. “We’re based here in the U.S. We’ve never operated a hedge fund or something that trades against our customers. We, all our financial statements are audited.”

Coinbase was sued by the SEC on Tuesday, just one day after the regulator sued Binance. While the lawsuits are distinct, Moses Singer partner Howard Fischer told The Block that there were some similarities, particularly in how the agency called out the market structure that underpins both venues.

Armstrong also told CNBC that he did not regret taking the company public. 

“I’m glad we became a public company,” he said. “It’s not easy to go first. You’re going to take a few arrows, you know, we have to educate the public market, investors. We have to deal with the SEC but that’s what being the leader in the space means and so, we’re happy to do that.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The 2.5 billion SWEAT tokens, which constitute around 13% of the total supply, were allocated to users at the app’s conception last September.

EU officials are hoping to tempt crypto innovators as Binance and Coinbase complain of regulation by enforcement in the U.S.

The U.S. Securities and Exchange Commission’s move to file suit against crypto exchanges Binance and Coinbase this week sent shockwaves across the industry and caused increased concern about the competitiveness of the country’s digital asset ecosystem. It’s good news for the lawyers set for a massive payday, though. 

“If legal fees for both exceed $100 million, I would not be surprised,” Moses Singer partner Howard Fischer told The Block in an interview. Fischer, a former senior trial counsel at the SEC, led the regulator’s litigation into the London Whale scandal at JPMorgan Chase during his 9-year tenure at the agency.

While Binance and Coinbase could prevail in the suits, U.S. lawmakers could also step in, with a draft bill from senior House Republicans currently looking to provide a path for a digital token to go from being treated as a security to a commodity. If the exchanges lose the lawsuits and congress fails to act, however, Fischer said that could shut down “crypto in the U.S. as it exists today.”

Firms seems to be preparing for the latter outcome by expanding their footprint outside of the U.S. Coinbase, for its part, has established an offshore post in Bermuda to trade crypto-tied derivatives, while stablecoin issuer Circle on Tuesday announced it received a digital token license in Singapore. 

Crypto market structure 

As for the SEC’s complaints themselves, Fischer said that market participants are largely overlooking the extent to which they overlap, focusing too much on the allegation that both Binance and Coinbase traded unregistered securities. It is equally significant that the agency calls out the market structure that underpins their venues, as crypto exchanges operate much more integrated businesses than their traditional counterparts by bundling together services like trading, custody, and brokerage which are typically separate and distinct on Wall Street. 

“The allegations are not just that there was selling of securities,” Fischer said. “Both [complaints] focus very heavily on the argument that both combine functions that should be separate. By doing that they are taking multiple roles all without being registered.” 

Coinbase has argued that it has tried in earnest to engage with the SEC on creating a registration path, noting in a March blog post that it “proposed two different registration models. We spent millions of dollars on legal support to build these proposals and repeatedly asked for the SEC’s feedback. We got none.”

CEO Brian Armstrong has warned that the regulatory uncertainty in the U.S. could push the industry offshore and result in a national security issue for the country.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.