The U.S. Securities and Exchange Commission has agreed to postpone the payment of a $30-million fine from bankrupt crypto lender BlockFi until creditors are paid back. The amount represents the balance of a $50-million settlement with the regulator from February 2022, CoinTelegraph.com reported. According to June 22 court filings, the SEC will forgo the amount owed by BlockFi to “maximize” and avoid delays in funds’ distribution to investors “until payment in full of all other Allowed Claims.” The document stated, “The Commission has agreed to forego participating in any distributions under the Plan or requiring any cash reserve in connection with such distributions.” In February 2022, the SEC announced actions against the crypto lending company over its failure to register its high-yield interest accounts as securities. BlockFi agreed to pay $50 million to the regulator as part of the settlement and another $50 million to 32 U.S. states filing similar complaints. According to court documents, the SEC was at the top of BlockFi creditor’s list, along with West Realm Shires Services Inc. (doing business as FTX US). BlockFi filed for chapter 11 bankruptcy protection in late November after the FTX crisis raised questions about its financial health. According to its bankruptcy filing, BlockFi had $256.9 million in liquidity at that time.
The U.S. Securities and Exchange Commission (SEC) on Wednesday slapped Marcum LLP with a $10 million penalty for standards violations and systemic quality control failures in its audit work for hundreds of special purpose acquisition companies, or SPACs, Reuters reported. Marcum, one of the leading auditors of SPACs, had substantial and widespread deficiencies in its quality control policies and procedures when the firm saw a nearly six-fold increase in clients, the SEC said in a statement. Violations were found in 25-50% of audits reviewed, depending on the audit standard at issue, the SEC said. The SPAC boom of 2020 and 2021 brought the likes of DraftKings Inc and electric truck maker Nikola public, but drew scrutiny from watchdogs and the regulator for concerns over what some saw as less stringent due diligence practices. "Marcum neglected its essential gatekeeper function in service to its own growth," said SEC Chair Gary Gensler in a statement. The SEC found the deficiencies were not limited to Marcum's SPAC clients. In addition to the civil penalty, settlement requires Marcum undertake remedial actions including hiring an independent consultant to review its policies procedures and to abide by certain restrictions when taking on new clients.
A top U.S. Securities and Exchange Commission (SEC) official on Friday rejected criticism of the regulator's cryptocurrency crackdown and slammed the sector for violating securities laws, Reuters reported. The regulator's heightened scrutiny of crypto firms comes in response to the industry's failure to comply with the agency's regulations, SEC enforcement director Gurbir Grewal said at a Rutgers University and Lowenstein Sandler LLP event in New York. The agency's aggressive policing has sparked a wave of criticism from digital assets firms and advocates on Capitol Hill for what they describe as regulatory overreach. "We have worked thoughtfully and incrementally in this space," Grewal said on Friday. "Typically you'd also see compliance but we're not seeing that in this space, so we had to change strategies." The SEC began targeting initial coin sales as unregistered securities offerings, but has increasingly focused on crypto firms acting as unregistered exchanges and broker-dealers. The crypto sector has said that existing U.S. regulations are inadequate and called for new rules. On Friday, Grewal questioned whether such new rules would work to tamp down misconduct.
The Securities and Exchange Commission reached a deal with Binance late Friday that would allow the world’s largest cryptocurrency exchange to keep operating in the United States and safeguard customer assets as the company battles a government lawsuit, the New York Times reported. After filing fraud charges against Binance on June 5, the S.E.C. moved to freeze the firm’s U.S. assets in a move that the exchange’s lawyers said would put it out of business in the United States. But in a court filing on Friday, the S.E.C. said that the two sides had reached a compromise after several days of court-ordered mediation. On Saturday morning, Judge Amy Berman Jackson, who is overseeing the case in federal court in Washington, signed off on the deal. Under the agreement, funds belonging to customers of Binance.US, an affiliate of the company’s larger offshore exchange, would go into special digital repositories accessible only to the U.S. exchange — and not to Binance’s international operation, or its founder, Changpeng Zhao. The deal stipulates that Binance.US can transfer company assets “solely to make payments for expenses or to satisfy obligations incurred in the ordinary course of business.”
A federal judge yesterday urged the Securities and Exchange Commission to strike a compromise with Binance that would allow the global cryptocurrency exchange to continue operating in the U.S. as it fights a civil fraud lawsuit filed by the regulator, the New York Times reported. Last week, the SEC charged Binance and its U.S. affiliate with mishandling customers’ deposits and lying to regulators. It also sought to freeze the company’s U.S. assets, a move that Binance claimed would force it to shut down in the U.S. At a hearing yesterday in Washington, D.C., Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia asked the two sides to confer on a possible agreement over the asset freeze, arguing that they were closer to a deal than the rhetoric in their court filings suggested. Judge Jackson ordered them to continue negotiating and to submit a status update by Thursday. She also expressed skepticism about the SEC’s use of its enforcement powers to regulate the crypto world, calling it “inefficient and cumbersome.” The moves against Binance are part of an increasingly aggressive regulatory crackdown on the crypto industry. A day after filing the Binance lawsuit, the S.E.C. also sued Coinbase, the largest U.S. exchange, for dealing in unlicensed securities.
A trade group representing the $1.4 trillion leveraged loan market is urging U.S. Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and other agency heads to back the status quo of excluding loans from securities laws. The LSTA, an industry group for syndicated corporate loans, penned a letter this week warning that defining loans as securities could affect market liquidity and raise costs for corporate borrowers, who are already wrestling with higher interest rates after the Fed’s most aggressive monetary tightening in a generation. “These increased costs and heightened regulatory uncertainty would come at precisely the wrong time for the domestic economy and the borrowers that depend on access to the syndicated term loan market,” the LSTA said in a letter signed by Elliot Ganz, the group’s head of advocacy. The letter comes at a crucial moment for the industry, with the Securities and Exchange Commission set to deliver an opinion on the matter by the end of June in a court case centered on the categorization of leveraged loans. The court’s final decision stands to have sweeping consequences for the market, leading the LSTA to seek input from potentially more sympathetic agencies than the investor-focused SEC. The LSTA’s letter was addressed to Yellen, Powell, Acting Comptroller of the Currency Michael Hsu and Federal Deposit Insurance Corp. Chairman Martin Gruenberg.
Merit Peak, an offshore trading company controlled by Binance CEO Changpeng Zhao, received around $11 billion of client assets through a Seychelles-based firm set up to take customer deposits, a U.S. Securities and Exchange Commission filing shows, Reuters reported. The SEC filing, which on Tuesday asked a U.S. court to freeze Binance's U.S. assets, came a day after the SEC sued Binance, its billionaire CEO Zhao, and the operator of its U.S. affiliate exchange, for allegedly operating a "web of deception." In its 13 charges, the SEC alleged that Binance and Zhao used Merit Peak and Sigma Chain, another trading firm controlled by Zhao, to commingle corporate funds with client assets and use the monies "as they please." This put customers' assets at risk while Binance sought to "maximize" its profits, the SEC wrote in its civil complaint on Monday. In response to the SEC's lawsuit, Binance said it would defend its platform vigorously. "All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure," it said in a statement on Monday. The funds received by British Virgin Islands-based Merit Peak between 2019 and 2021 flowed from Key Vision Development Ltd, also controlled by Zhao, the SEC filing on Tuesday showed.
In two years of running the Securities and Exchange Commission, Gary Gensler said that he or his staff met dozens of times with cryptocurrency exchanges that were seeking special exemptions from the laws governing the rest of Wall Street. Those talks didn’t lead anywhere, and neither did Gensler’s efforts to cajole, prod and even threaten crypto into compliance. Now the SEC is unleashing a barrage of enforcement actions against crypto’s biggest middlemen, in a fight that has existential stakes for the companies and could define Gensler’s legacy, the Wall Street Journal reported. “I’ve been around finance for four decades,” Gensler said in an interview Tuesday. “I’ve never seen so much just noncompliance and hype masquerading as reality as I’ve seen in this field.” The SEC this week sued Binance, the world’s largest crypto platform, and Coinbase, the biggest U.S. platform. It said they operated as securities exchanges without properly registering their businesses with the SEC. The agency hopes courts will order the firms to follow its rules for stock exchanges or stop trading crypto assets in the U.S. The lawsuits, which the companies say are misguided, could take years to resolve. If the SEC lost either case, it would be a setback for the government’s ability to oversee the crypto market. The enforcement actions mark the culmination of a strategic pivot by the SEC under Gensler. Before he took the agency’s helm, the SEC had repeatedly sued individual cryptocurrencies — a potentially endless game of whack-a-mole in a market with thousands of assets. When Gensler took office in 2021, he urged enforcement staff to target the hubs that most investors use to buy and sell crypto.
In an intensifying effort to end what the authorities see as the era of lawlessness in the cryptocurrency market, the Securities and Exchange Commission yesterday sued Coinbase, the largest crypto trading platform in the U.S., claiming that the company broke the law by not registering as a broker, the New York Times reported. The SEC filed the lawsuit a day after it accused Binance, the world’s biggest cryptocurrency trading exchange, of mishandling customer funds and lying to American regulators and investors about its operations. With these federal actions against major crypto companies, along with other lawsuits at the state level, regulators have sought to reshape the crypto sector by treating digital asset exchanges like more traditional financial firms, while pushing out individuals and companies that they view as bad actors. In its filing yesterday, the SEC detailed the ways in which Coinbase’s leaders had demonstrated that they knew how the marketing and sale of digital assets should be governed under U.S. laws, even while failing to follow them. “Coinbase has elevated its interest in increasing its profits over investors’ interests, and over compliance with the law and the regulatory framework that governs the securities markets and was created to protect investors and the U.S. capital markets,” the filing said. Coinbase went public in April 2021, an event seen as a milestone in crypto’s march into the mainstream. The company handled $830 billion worth of trades last year, with nearly nine million users making at least one trade per month. The SEC said that Coinbase had made billions easing the sale of crypto assets but deprived investors of significant protections. Its complaint, filed in federal court in Manhattan, claims that the company operated as an unregistered exchange, even though it told investors in going public that regulators might deem some of the products traded on its platform to be securities. https://www.nytimes.com/2023/06/06/business/sec-coinbase-lawsuit-crypto…
The list of digital tokens that are deemed unregistered securities by the Securities and Exchange Commission now spans over $120 billion of crypto following the U.S. agency’s lawsuits against Binance Holdings Ltd. and Coinbase Global Inc., Bloomberg News reported. The regulator in the complaints against Binance and Coinbase cited more than a dozen major coins as assets that fall under its purview. Such a designation comes with strict investor-protection rules and could make the tokens harder to trade if exchanges shy away from listing them for fear of falling foul of the SEC. Binance’s BNB — which has a market value of $44 billion — stablecoin BUSD, Cardano’s ADA, Solana’s SOL, Polygon’s MATIC, Filecoin’s FIL and Algorand’s ALGO were among those mentioned in the Binance lawsuit. NEAR tokens and Dfinity’s ICP tokens were among those cited in the Coinbase lawsuit. When added to other tokens like XRP separately targeted by the SEC, the agency has now categorized over $120 billion of coins specifically as unregistered securities. SEC Chair Gary Gensler has long said most tokens are subject to the agency’s investor-protection laws and that trading platforms should register with the regulator. But labeling specific tokens represents a tougher approach. U.S. officials have cracked down on digital assets this year following a rout in 2022 and a series of blowups, including the bankruptcy of the FTX exchange.
The Securities and Exchange Commission on Monday sued Binance, the world’s largest cryptocurrency exchange, alleging the overseas company operated an illegal trading platform in the U.S. and misused customers’ funds, the Wall Street Journal reported. The SEC lawsuit also named Changpeng Zhao, Binance’s founder and controlling shareholder, as a defendant. 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. The Wall Street Journal reported last year that the SEC was examining the relationship between Binance.US — the U.S. arm created in 2019 — and Sigma Chain and Merit Peak. The SEC filed the case in federal court in the District of Columbia. Binance engaged in “blatant disregard of the federal securities laws and the investor and market protections these laws provide,” the agency wrote in its court complaint. U.S. regulators have been circling Binance for years, with the SEC and the Justice Department sending subpoenas to its U.S. arm in late 2020, according to documents viewed by the Journal. Officials have ramped up enforcement efforts over the past year, after the collapse of numerous crypto companies including one of Binance’s biggest rivals, FTX.
