Crypto exchanges experienced a whirlwind few days after the US Securities and Exchange Commission (SEC) launched full-scale attacks on two of the largest platforms, Binance and Coinbase.
Bitcoin and other cryptocurrencies went into freefall, although have since stabilised, suggesting the kneejerk reaction is over and some level of calm has been restored to the market.
Here is a quick recap of what has happened so far this week and how the market reacted.
Binance
Binance, the largest cryptocurrency exchange, alongside its CEO and founder Changpeng Zhao was charged by the SEC for breaching 13 regulations on Monday.
Included in some of the alleged breaches were a failure to restrict US customers from its platform and misleading investors about its market surveillance controls.
The complaint, filed in a federal court in Washington, also accused Binance of secretly controlling customers’ assets, allowing them to commingle and divert customer funds, “as they please.”
Immediately after the complaint was launched, Bitcoin slipped by 6%.
Not only that but in the 24 hours following the announcement of the complaint, some US$780mln of crypto was pulled from the platform, according to data from Nansen cited in The Telegraph.
The situation wasn’t helped by ‘financial commentators' such as Jim Cramer causing panic in the market.
If you have money with Binance, beat your fellow "investors" and get out as your assets are commingled... First out, might get money
— Jim Cramer (@jimcramer) June 6, 2023
In the latest development, the SEC yesterday filed an emergency application which sought to freeze Binance assets to ensure its US-based customers were protected.
Coinbase
A day later, Coinbase was whacked with its own set of charges by the SEC for allegedly operating its platform as an unregistered securities exchange, broker, and clearing agency while failing to register as these services, depriving investors of regulation and protection.
Since at least 2019, Coinbase has made “billions of dollars unlawfully,” by facilitating the buying and selling of crypto, the SEC’s complaint filed to the New York Southern District Court said.
The SEC also said it was charging Coinbase for failing to register the offer and sale of its staking-as-a-service platform.
Coinbase, which is listed in New York, shed 13% to US$51.61 on the back of the news.