{"id":19484,"date":"2023-06-07T12:59:36","date_gmt":"2023-06-07T16:59:36","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/sec-chair-gensler-likens-binance-to-ftx-expresses-concern-over-crypto-industry\/"},"modified":"2023-06-07T12:59:38","modified_gmt":"2023-06-07T16:59:38","slug":"sec-chair-gensler-likens-binance-to-ftx-expresses-concern-over-crypto-industry","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=19484","title":{"rendered":"SEC Chair Gensler Likens Binance to FTX, Expresses Concern Over Crypto Industry"},"content":{"rendered":"
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Gary Gensler \u2013 chairman of the U.S. Securities and Exchange Commission (SEC) \u2013 sees \u201cparallels\u201d between Binance and its failed competitor FTX\u2019s handling of customer assets.\u00a0<\/p>\n

During an interview with Bloomberg on Tuesday, the chairman said financial advisors should not look to Binance as a trustworthy custodian for their crypto assets.<\/p>\n

\u201cYour client funds, under an existing 2009 rule, have to be [under] proper qualified custodians,\u201d said Gensler. \u201cThat\u2019s not what you have on Binance \u2013 make no mistake.\u201d<\/p>\n

On Monday, the SEC filed a 136-page lawsuit<\/u> against Binance with accusations including securities law violations, market manipulation, and illegal service to US-based clients from its international platform.
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Among its many complaints were claims that Binance had mismanaged and \u201ccommingled\u201d user assets in a manner that regulated companies with oversight could not.<\/p>\n

Specifically, Binance had a sister organization controlled by Binance CEO Changpeng Zhao (CZ) called \u201cSigma Chain,\u201d which the SEC alleged to have \u201cengaged in wash trading that artificially inflated the trading volume of crypto asset securities on the Binance.US Platform.\u201d<\/p>\n

The filing added that another sister organization \u2013 Merit Peaked Limited \u2013 commingled billions of dollars in funds from both Binance and Binance.US. While both the international and US entities were supposed to operate separately, Gensler alleged both are both ultimately controlld by CZ.<\/p>\n

The chairman likened these internal relationships to those seen with FTX and Alameda Research \u2013 the crypto exchange and trading desk respectively that were both owned by Sam Bankman-Fried. He said:<\/p>\n

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\u201cYou see platform after platform that the entrepreneurs behind the platform also are trying to build wealth for themselves and their investors through sister organizations, hedge funds, trading against the customers, or even\u2026 dealing against their customers.\u201d<\/p>\n<\/blockquote>\n

How Crypto Companies Can Comply<\/h2>\n

The chairman added that the crypto industry will need to \u201ccome into compliance with basic public policy\u201d regarding disclosures, conflicts of interest, segregating customer funds, and fighting against fraud and manipulation. \u201cWithout that, this whole area stands a chance of collapsing like a house of cards,\u201d he said.\u00a0<\/p>\n

The SEC also sued Coinbase in a 101-page lawsuit on Tuesday for violating many of the same laws as Binance. The Coinbase filing placed particular emphasis on its listing of multiple unregistered \u201ccrypto asset securities,\u201d despite never having registered as a securities exchange.\u00a0<\/p>\n

In a separate interview that day, Gensler argued that the United States doesn\u2019t need more \u201cdigital currency\u201d in general.\u00a0<\/p>\n

\u201cSo what is the real underlying value of these tokens?\u201d Gensler said. \u201cThat\u2019s why you need full, fair, and truthful disclosures.\u201d<\/p>\n<\/p><\/div>\n