BinanceUS Suspends USD Deposits, Says Bank Partners Will Pause Dollar Payments Next Week (The Block)
BinanceUS said late Thursday that its banking partners will stop processing its dollar payments as early as the day a federal judge will hear arguments over a temporary restraining order on the U.S. trading affiliate. The announcement comes days after the Securities and Exchange Commission announced a lawsuit against the firm as well as crypto exchange giant Binance and its CEO, Changpeng Zhao. The SEC is seeking a freeze on BinanceUS' assets, though the SEC has asked to court to approve a temporary restraining order that would allow BinanceUS to continue to process withdrawal requests from customers. The resulting regulatory pressure, BinanceUS said, has "created challenges for the banks with whom we work."
Paradigm Wants the SEC to Withdraw Its ‘Incoherent’ Proposed Definition of Exchanges (The Block)
Rodrigo Seira, special counsel at the crypto venture firm Paradigm, and the firm's Policy Director Justin Slaughter commented today on the Securities and Exchange Commission's redefinition of an exchange — claiming it needs to start from scratch. "The only way for the Commission to arrive at a valid regulatory approach to DeFi is to withdraw its proposed amendments and start again at square one: with a notice of proposed rulemaking that clearly describes its proposed regulatory approach, after genuine engagement with the DeFi industry, a clear-headed assessment of the statutory limits on its authority in this area, and a fulsome analysis of the costs and benefits of the alternative approaches that Congress has actually authorized it to pursue," Seira and Slaughter wrote in the statement.
Former CFTC Head Joins Circle as Chief Legal Officer (The Block)
Circle — the company behind stablecoin USDC — has hired Heath Tarbert, the former chairman of the United States Commodities Futures Trading Commission, as its new chief legal officer, the company announced Thursday. Tarbert, who left the CFTC after an 18-month tenure with the financial regulator, joined Circle from market-making firm Citadel Securities, where he also held the top legal role. According to a press release, Tarbert is replacing Flavia Naves, who left Circle earlier this year.
BitGo to Acquire Rival Crypto Custodian Prime Trust (CoinDesk)
Cryptocurrency custody firm BitGo has reached a preliminary agreement to buy Prime Trust, another crypto custody specialist regulated in the state of Nevada, according to two people familiar with the matter. The deal is preliminary, and still requires regulatory approval, according to one source. Prime Trust had been the subject of some speculation with people online suggesting the firm was facing bankruptcy. The financial terms of the deal were not disclosed by the other source.
Soros Fund Management CEO Says Crypto Is Ripe for Tradfi Takeover (The Block)
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.
SEC’s Gary Gensler Had Crypto in His Sights for Years. Now He’s Suing Binance and Coinbase (WSJ)
In two years running the Securities and Exchange Commission, he said, 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.
Binance Money Trail Reveals $70 Billion Flowing Through Silvergate, Signature (Bloomberg)
Crypto exchange Binance and related entities shuttled some $70 billion through accounts at now-defunct Silvergate Bank and Signature Bank from 2019 up until this year, including 'large amounts of money' flowing in and out within days, according to new details revealed in a filing Wednesday. Silvergate facilitated more than $50 billion in deposits for Binance-related parties, while Signature handled more than $19 billion, the 27-page document, which was filed Wednesday in US District Court in Washington, shows. Some of the funds flowed out to foreign entities, according to the filing, which cited a review of financial records including bank statements, deposits, canceled checks and wire transfers.
Binance.us to Pause OTC Trading Portal, Delist Some Trading Pairs After SEC Suit (The Block)
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.
‘We Have Made No Decision at All to Delist Assets:’ Coinbase Chief Legal Officer (The Block)
Coinbase Chief Legal Officer Paul Grewel says the firm has not yet decided whether it will delist any assets from the crypto exchange in the wake of the lawsuit its facing from the U.S. Securities and Exchange Commission. "To address the question of whether or not we're going to delist any of these assets, of course we're always looking at new facts, new information, new allegations to understand whether or not our previous analysis was incorrect," Grewel says in a forthcoming episode of The Scoop. "But as I sit here today, we have made no decision at all to delist assets, and we remain confident in our original analysis." Grewel's comments come after Coinbase was sued by the SEC on June 6 over allegations that it violated U.S. securities rules by operating as a broker, exchange and clearing agency without registering as such.
Arbitrum Bug Causes Brief Delay in Network Operation; Now Fixed (The Block)
A bug in Arbitrum's sequencer code caused a brief pause in the network's ability to batch transactions to the Ethereum blockchain. As a Layer 2 network, Arbitrum batches up transactions and submits them in a single transaction to Ethereum in an effort to help reduce the load on the main blockchain. To do so, it uses what's called a sequencer to gather these transactions, order them and batch them onto Ethereum. Yet a bug in the sequencer's code stopped it from being able to batch transactions onto Ethereum, according to Arbitrum developers. This caused a brief outage where transactions were not getting confirmed on the main chain.
SEC Charges Coinbase for Operating as an Unregistered Securities Exchange, Broker, and Clearing Agency (SEC)
The Securities and Exchange Commission today charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency. The SEC also charged Coinbase for failing to register the offer and sale of its crypto asset staking-as-a-service program. According to the SEC’s complaint, since at least 2019, Coinbase has made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities. The SEC alleges that Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the Commission as required by law.
U.S. Court Tells SEC to Respond to Coinbase's Rulemaking Petition Within a Week (CoinDesk)
In April, Coinbase filed an Administrative Procedure Act challenge asking the court to force the SEC's hand and get the regulator to respond to its 2022 petition for formal rulemaking in the digital assets sector, arguing that the existing requirements are ill-suited for digital assets. Now, the SEC has been ordered to explain within 7 days if it intends to decline Coinbase’s request, the reasons for such a decision, or a timeline of when it expects to come to a decision. “Rules of the road, from legislation or rulemaking or both, must come before enforcement actions. That is why we petitioned the SEC for rulemaking nearly a year ago in the first place,” Paul Grewal, Coinbase’s Chief Legal Officer, said in a tweet thread. All this comes as the SEC sues Coinbase over allegations that it operates an unregistered securities exchange.
Circle Obtains Major Payment Institution License in Singapore (The Block)
Circle has obtained a Major Payment Institution license from the Monetary Authority of Singapore — allowing the USDC stablecoin issuer's affiliate, Circle Internet Singapore, to offer digital payment token services and cross-border and domestic money transfer services in the city-state. "This milestone signifies a huge step forward for the future of regulated, transparent, and trusted dollar digital currencies in Singapore and the greater Asia region," Circle said in a press release. Circle officially opened its office in Singapore last month after collaborating with the country's first government-supported blockchain ecosystem builder, Tribe, in February. Late last year, Circle Singapore received In-Principle Approval as a Major Payment Institution License holder from the country's monetary authority.
SEC Files Motion to Freeze Cryptocurrency Held by Binance, binance.us, CZ (The Block)
The Securities and Exchange Commission followed up on its request in yesterday's enforcement action, seeking an order for the freeze of assets, including cryptocurrencies, held by Binance, Binance.US, their owner Changpeng 'CZ' Zhao. The SEC already asked for a freeze of assets held by Binance, Binance.US, and owner Changpeng 'CZ' Zhao as part of its initial enforcement action filed on Monday. But the agency followed up with a temporary restraining order filing to further expedite the matter. The commission asked for the asset freeze due to accusations accusing Zhao and Binance executives of redirecting customer funds to his own investment funds to use as Zhao wished, including purchasing an $11 million yacht and buying BUSD. The allegations are similar to those made against FTX, Alameda Research, and Sam Bankman-Fried, though Zhao and Binance only face civil charges so far.
‘We Will Continue to Operate Our Business as Usual’ Says Coinbase Legal Chief (The Block)
Coinbase’s top lawyer chided the Securities and Exchange Commission in congressional testimony, as he testified before a House of Representatives committee currently drafting legislation to create a new framework for digital asset markets in the U.S. “It’s disappointing, but not surprising, that the SEC has decided to bring legal action against Coinbase today, the day of our testimony before this committee’s critical hearing on creating a workable framework for digital asset regulation,” said Coinbase Chief Legal Officer Paul Grewal, hours after the SEC sued his company over alleged securities law violations. “The solution is legislation that allows fair rules for the road be developed transparently and applied equally, not litigation.”
SEC Files 13 Charges Against Binance Entities and Founder Changpeng Zhao (SEC)
The Securities and Exchange Commission today charged Binance Holdings Ltd. (“Binance”), which operates the largest crypto asset trading platform in the world, Binance.com; U.S.-based affiliate, BAM Trading Services Inc. (“BAM Trading”), which, together with Binance, operates the crypto asset trading platform, Binance.US; and their founder, Changpeng Zhao, with a variety of securities law violations. Among other things, the SEC alleges that, while Zhao and Binance publicly claimed that U.S. customers were restricted from transacting on Binance.com, Zhao and Binance in reality subverted their own controls to secretly allow high-value U.S. customers to continue trading on the Binance.com platform. Further, the SEC alleges that, while Zhao and Binance publicly claimed that Binance.US was created as a separate, independent trading platform for U.S. investors, Zhao and Binance secretly controlled the Binance.US platform’s operations behind the scenes.
SEC’s Regulatory Net Now Covers $115 Billion of Crypto After Lawsuit Against Binance (Bloomberg)
The list of digital tokens deemed as unregistered securities by the Securities and Exchange Commission now spans over $115 billion of crypto after the US agency’s lawsuit against Binance Holdings Ltd.The regulator in the complaint on Monday cited a dozen 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.
Coinbase Shares Plummet as SEC Sues Rival Crypto Exchange Binance (The Block)
Shares of U.S.-based cryptocurrency exchange Coinbase plummeted after word broke that the Securities and Exchange Commission was suing rival trading platform Binance. Shares declined almost 12% from their Friday close after news of the lawsuit first hit. They've since recovered slightly and are down 10.3% at $57.91, according to TradingView. The SEC alleges Binance, the world's largest crypto trading platform, and affiliated companies misled customers and misdirected funds to a separate investment fund owned by the company's CEO, Changpeng 'CZ' Zhao.
CFTC Approves Cboe Clear Digital to Clear Margined Digital Asset Futures (The Block)
The Commodity Futures Trading Commission on Monday said it had approved an amended order of registration for Cboe Clear Digital to clear additional products as a derivatives clearing organization. The amended order permits Cboe Clear to "provide clearing services for digital asset futures on a margined basis for futures commission merchants, in addition to the fully collateralized futures and fully collateralized swaps previously authorized," the U.S. regulator said in a statement. Cboe Digital Exchange, Cboe Clear's parent company, is registered as a designated contract market with the CFTC. The measure authorizes Cboe to expand its clearing of futures contracts on crypto assets "while staying within the traditional U.S. futures intermediated market structure," CFTC Commissioner Christy Goldsmith Romero said in a separate statement.
Genesis Bankruptcy Judge Extends Mediation Period Between Genesis, Creditors (The Block)
U.S. Bankruptcy Court Judge Sean Lane extended a mediation period between crypto lender Genesis and its creditors at a Monday bankruptcy hearing as tensions flared over the role Genesis’ parent company Digital Currency Group (DCG) would play in the lender's restructuring. The mediation period, slated to end last month, will now conclude on June 16. Judge Lane appointed a mediator to steer talks between the insolvent lender and its creditors on May 1 after previous discussions between the parties broke down earlier this year. Digital Currency Group is the parent company to CoinDesk. “There's lots of different kinds of conversations that have to happen in connection with [bankruptcies],” Judge Lane said during the hearing. “The challenge always, of course, is that you can't negotiate everything all at once.”
Atomic Wallet Users Hacked for $35M Worth of Bitcoin, Ether, Tether and Other Tokens (CoinDesk)
The crypto industry’s latest causality occurred over the weekend as nearly $35 million worth of various tokens were stolen from Atomic Wallet, a centralized storage and wallet service. These tokens included bitcoin (BTC), ether (ETH), tether (USDT), dogecoin (DOGE), litecoin (LTC), BNB coin (BNB) and polygon (MATIC). Tron-based USDT seemed to be the largest stolen stash, on-chain analytics cited by blockchain sleuth ZachXBT showed. Security audit company Least Authority warned in a blog post in 2022 that funds in Atomic Wallet may have been at risk.
New US Legislation Could Set Out Crypto Pathway From Security Status to Commodity (The Block)
A new draft bill from senior House Republicans in the U.S. Congress seeks to provide a path for a digital token to go from being treated as a security to a commodity as part of an effort to provide more flexibility and brighter guidelines for digital assets within in the country. The discussion draft released by House Financial Services Committee Chair Patrick McHenry, R-N.C., and House Agriculture Committee Chair Glenn ‘G.T.’ Thompson, R-Pa., is the latest effort to better illuminate the road around how digital assets fit into existing U.S. financial law, while creating accommodations for the unique aspects of blockchain-based tokens. Among other provisions, the bill would give a clear definition as to when a project is sufficiently decentralized to no longer have its tokens qualify as investment contracts, a longstanding point of tension for crypto projects in the U.S.
Binance’s Regulatory Woes Pave a Path for CEO Zhao’s Heir Apparent (Bloomberg)
In mid-May, cryptocurrency exchange Binance got some bad news in a far-flung corner of its sprawling universe. Binance’s payments partner in Australia had abruptly cut it off, meaning local customers couldn’t deposit Aussie dollars on the platform via bank transfer. The hit to business was immediate, with Binance halting all Aussie trading pairs about two weeks later, along with bank withdrawals of the local currency.
FTX Debtors Object to Genesis’ ‘Critical’ Claims Estimate of ‘$0.00’ (Cointelegraph)
Just a month after bankrupt cryptocurrency exchange FTX sought $4 billion from the also bankrupt crypto lender Genesis, it is now contesting a claim that it is entitled to nothing. According to a June 2 court filing in the United States Bankruptcy Court for the Southern District of New York, FTX debtors have objected to Genesis’ estimation that they are entitled to claims totaling “$0.00,” which Genesis stated in an estimation procedures motion filed on June 1. The FTX debtors alleged they were uninvolved in the mediation process and were not given “any advance notice” before the motion was filed.
Coinbase International Debuts Perpetual Futures for Non-US Institutional Traders (Blockworks)
Coinbase has launched a new perpetual futures exchange targeting non-US institutional investors and traders, in an effort to diversify its revenue and capture a larger share of the crypto market. The Coinbase International Exchange will initially list bitcoin (BTC) and ether (ETH) perpetual futures later this week, settling all trading in USDC without requiring fiat on-ramps, Coinbase said in a statement shared with Blockworks. It follows reporting last month that the exchange was said to be eyeing a derivatives push in overseas jurisdictions including Abu Dhabi while securing licensure in Bermuda, where the new exchange will be established.