According to the crypto lawyer, the crackdown initiated by the US Securities and Exchange Commission (SEC) could affect Binance in other regions and its application for a license in Hong Kong. The compliance specialist is convinced that the US securities regulator wants to “require Binance to leave the United States entirely.” According to Hong Kong-licensed lawyer Gilbert Ng, this could affect the coin trading platform in other regions and its licensed application in Hong Kong.

This week, the SEC sued Binance, the world’s largest crypto exchange by trading volume, and won court permission to freeze crypto assets controlled by its US subsidiary. It claims that several tokens listed on Binance are unregistered securities. The SEC also accuses Binance of violating U.S. securities laws related to registration by unregistered offering and selling of its own crypto assets, including the BNB token and the Binance USD (BUSD) stablecoin. Unlike major stablecoins like Tether (USDT), BUSD offers holders some benefits when using the Binance platform.

The United States District Court in Washington, D.C. issued a subpoena to Binance CEO Changpeng Zhao on June 7, just two days after the Securities and Exchange Commission (SEC) formally sued the exchange for alleged transactions in unregistered securities. . “A criminal case has been initiated against you,” the summons says. Zhao does not have to be present in person. However, he is required by law to respond to the subpoena after service, and according to the document, Binance and its CEO will have 21 days after service of the document to respond. “If you do not respond, you will be subject to a default judgment for the damages claimed in the complaint,” the subpoena reads.

The SEC lawsuit against Binance, made public on June 5, brought 13 charges against the cryptocurrency exchange, most of which related to allegations of unregistered sales of its internal products and services, its cryptocurrency staking program, and the company’s alleged failure to properly register its primary exchange and its US arm. as a broker, national securities exchange and clearing agency. Binance disputes the SEC allegations. In a statement issued in response to the SEC action, the company said, “We are different from many,” implying that its business behavior is not comparable to previous stock exchange scandals such as the FTX crash. Binance denies that its exchange has ever “siphoned consumer funds” or “borrowed against collateral.” The company also claims it has never made “large donations” to political candidates or provided “large sponsorships” to entertainment and media organizations.

Coinbase CEO Brian Armstrong also responded to a lawsuit filed by the US Securities and Exchange Commission (SEC) against his cryptocurrency exchange. As a reminder, the Securities Regulator accused Coinbase of “operating its crypto asset trading platform as an unregistered national securities exchange, broker and clearing agency” and selling unregistered securities “in connection with its staking as a service program.” Armstrong tweeted: “Regarding today’s SEC complaint against us, we are proud to be representing the industry in court to finally get some clarity on crypto regulations.” Coinbase’s chief executive outlined a number of factors influencing its exchange’s alleged securities law violations. Armstrong pointed out in a tweet on Tuesday that the SEC and the Commodity Futures Trading Commission (CFTC) “have been making conflicting and inconsistent statements about what is a security and what is a commodity.” One of the key topics on which the two regulators disagree is the classification of Ethere (ETH). While SEC Chairman Gary Gensler argues that all crypto tokens other than Bitcoin (BTC) are securities, CFTC Chairman Rostin Behnam insists that the second largest cryptocurrency is a commodity.

“Instead of publishing a clear set of rules, the SEC has taken a ‘Regulation by Enforcement’ approach that is hurting America. So if we have to go to court to get clarity, so be it,” Coinbase CEO added. Armstrong also noted, “The SEC has reviewed our business and has given us permission to go public in 2021.” However, several people have pointed out on Twitter that the lawsuit clearly states that “Declaring an effective registration statement Form S-1 is not an opinion or endorsement by the SEC or staff of the legality of the issuer’s underlying business.”

After the securities regulator announced its actions against Coinbase, many people took to social media to criticize the SEC for regulating the crypto industry through enforcement. Senator Bill Hagerty (R-TN) wrote, “The SEC is using its role as a weapon to kill the industry. Allowing a company to release listings and then thwart their attempts to register is without justification.” Senator Cynthia Lummis (R-WY) opined, “The SEC has failed to provide a way to register digital asset exchanges and, worse, has failed to provide adequate legal advice on what distinguishes a security from a commodity.” Even Securities and Exchange Commission Chairman Gary Gensler himself has “acknowledged the uncertainty of crypto regulation and should just be a witness” to Binance and Coinbase, the exchange’s lawyers told the SEC.

Gilbert Ng also noted that there are no laws and by-laws in the US about cryptocurrencies, while it is necessary to enforce existing legislation. This creates uncertainty in terms of oversight while Hong Kong already has a clear structure in place, he explained in line with Wu Blockchain tweets on Wednesday. Moreover, Hong Kong has a different definition of securities, the lawyer noted. Some coins may be considered security tokens in the United States but not in Hong Kong. Currently, Hong Kong only allows professional investors to purchase security tokens. On June 1, the Chinese Special Administrative Region began accepting applications for licenses from virtual asset providers such as crypto exchanges. The licenses will allow them to provide services to retail investors in Hong Kong, including the trading of cryptocurrencies such as bitcoin and ether.

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