Crypto tokens plummeted on concern Gensler is expanding SEC crackdown

SEC Chairman Gary Gensler stepped up his attack on the crypto industry this week, filing a lawsuit Coinbase and Binance for securities violations and questioning the future of token trading.

Cryptocurrency investors took the hint. Four of the 10 most valuable cryptocurrencies have fallen by at least 15% this week, according to CoinMarketCap, a sell-off sparked by lawsuits and Gensler’s interview with CNBC on Tuesday, in which he said “we don’t need any more digital currency business.” “

In claiming that Coinbase was operating as an unregistered broker and exchange, the SEC said that at least 13 of the crypto assets available to the company’s clients are considered “crypto asset securities.” They include Solana’s SOL token, Cardano’s ADA token, Polygon’s MATIC coin, and Protocol Labs’ Filecoin token (FIL).

trading application Robinhood He followed it up on Friday with the announcement that, starting June 27, it will no longer support Cardano, Polygon, and Solana coin trading. “No other currencies were affected,” the company said. also on friday, Crypto.com She said she would shut down the American Institutions Exchange.

The company said in a mail.

Cardano, the seventh most valuable cryptocurrency, according to CoinMarketCap, is down 20% in the past week. Solana, the ninth seed, fell 18%. Polygon, in tenth place, decreased by 18%. Filecoin, which is further down the list, is down 19%. Binance’s BNB token, in fourth place, is down 16%.

bitcoin And raisedthe two most popular cryptocurrencies, were more stable, each down less than 5%.

Gensler, who was appointed by President Joe Biden to head the Securities and Exchange Commission, has spent much of the past year going after cryptocurrency firms and exchanges for actively selling risky, speculative securities that look like something else.

From high-profile fraud cases involving Sam Bankman-Fried’s FTX and Terraform Labs Do Kwon to Dozens of counts Including coin offerings and allegedly false marketing, Gensler has made the once-thriving crypto industry his primary target for removal.

“The investing public enjoys the benefit of US securities laws,” Gensler said in an interview with CNBC’s “Squawk on the Street” on Tuesday. “Crypto shouldn’t be any different, and these platforms, these brokers, should comply.”

Gensler’s television appearance came after the SEC sued Coinbase and said the company should be “permanently restricted and prohibited” from “operating the crypto-asset trading platform as an unregistered national securities exchange, broker, and clearing agency.”

Shares of Coinbase, the only major publicly traded cryptocurrency exchange in the US, sank 18% this week. Paul Grewal, Coinbase’s chief legal officer, told CNBC in a statement that the SEC’s approach to enforcement without setting clear rules “harms America’s economic competitiveness and companies like Coinbase that have a clear commitment to compliance.”

The previous day, in a lawsuit it filed against Binance, the SEC alleged that the company and founder Changpeng Zhao siphoned off billions of dollars in user funds and sent them to a European company controlled by Zhao.

While Binance does not claim an official domicile and does most of its business overseas, the SEC complaint cited a senior executive who allegedly told a compliance officer that the company was operating as an “unlicensed securities exchange in the United States of America.” “

in blog postBinance said it was “disappointed” in the SEC lawsuit and said it had “engaged in extensive discussions in good faith to reach a negotiated settlement to resolve its investigation.”

Others named in the SEC lawsuit also weighed in after charges landed this week.

The Cardano Foundation, which is working to promote use of the technology of the same name, said in a tweet that it does not agree with its ADA coin being classified as a security and that we “look forward to continuing to engage with regulators and policymakers to bring legal clarity and certainty on these matters.”

Filecoin developer Protocol Labs said in a series of tweets Thursday that the token is critical to the operation of the distributed storage network. It’s how people buy storage from providers, and Protocol says the cost is much less than what users will pay Amazon or web services Google clouds.

“Filecoin is a global cryptocurrency storage network that holds the most important human information, not security,” Protocol Labs tweeted.

In its 101-page complaint against Coinbase, the SEC made it clear that regardless of whether these tokens have some level of utility, they can easily be purchased on the app by people who have no interest other than investing. Coinbase generates revenue by executing these transactions.

“Coinbase makes these crypto assets available for trading, without limiting transactions to those who may acquire or treat the asset as anything other than an investment,” the SEC said.

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