SEC will not pursue enforcement action against Paxos

July 11, 2024 Coin Telegraph

Court allows most SEC claims to proceed in Binance suit

June 29, 2024 Coin Telegraph

Binance.US not cooperating with investigation, US SEC says in filing

September 15, 2023 Coin Telegraph

Binance

SEC said in a court filing that Binance.US has produced only 220 documents during the discovery process many of which were “unintelligible screenshots and documents without dates or signatures.”

The United States Securities and Exchange Commission (SEC) has accused Binance.US of non-cooperation in the ongoing investigation against the crypto exchange, according to a court filing dated Sept. 14.

The SEC in its court filing noted that Binance.US’s holding company called BAM has produced only 220 documents during the discovery process. Many of the submitted documents under the Consent Order “consist of unintelligible screenshots and documents without dates or signatures.”

SEC added that BAM has refused to produce essential witnesses for deposition, instead agreeing only to four depositions of witnesses it has unilaterally deemed appropriate and said:

“It has responded to requests for relevant communications with blanket objections and has refused to produce documents kept in the ordinary course of its business, claiming those documents do not exist, only for the SEC to later receive such documents from other sources.”

The SEC also raised concerns over Binance.US's use of Ceffu, wallet custody software provided by the global entity Binance Holdings Ltd. The SEC noted that BAM made inconsistent statements about Ceffu’s and Binance’s involvement in the wallet and customer funds management.

SEC said that BAM first claimed Ceffu was BAM’s wallet custody software and services provider but later stated that Binance was BAM’s wallet custody software provider. The regulators raised concern that the crypto exchange's usage of Ceffu violates a prior agreement meant to prevent funds from being diverted abroad.

The SEC filed a lawsuit against Binance on June 5, pressing 13 charges against the crypto exchange including unregistered securities offerings, the Simple Earn and BNB Vault products, and its staking program. The SEC claimed that Binance.com, Binance.US, and BAM Trading should have registered as clearing agencies, broker-dealers, and exchanges, respectively. The unregistered offer and sale of Binance.US' staking-as-a-service programme required BAM Trading to register as a broker-dealer as well.

The latest accusations by the SEC against Binance.US come amid an internal crisis at the exchange. The Binance.US CEO Brian Shorder joined the long list of top Binance executives leaving the firm this year followed by the resignation of the head of legal and the exchange’s chief risk officer within days.

Binance.US didn’t immediately respond to requests for comments.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: US and China try to crush Binance, SBF’s $40M bribe claim: Asia Express

Binance pushes new stablecoin as it confirms plan to cease BUSD support

August 31, 2023 Coin Telegraph

Binance

Paxos has earlier said it will halt support of Binance's stablecoin by February 2024, now the exchange has said it will also stop support by that time.

Crypto exchange Binance has encouraged users to start converting their Binance USD (BUSD) stablecoin holdings into a newly listed stablecoin amid plans to wind down support for BUSD.

In an Aug. 31 statement from Binance, the crypto exchange confirmed prior speculation that it will gradually stop support for BUSD by February 2024 — a decision in line with Paxos' plans to end BUSD redemption at that time.

The official statement is the first time Binance has addressed the subject after several users shared screenshots of a pop-up on their mobile app about the planned support halt.

FYI: Binance will stop BUSD in 2024

According to an official announcement on crypto exchange Binance’s app, the exchange pops up a notification for users that they will stop supporting BUSD in 2024.

This is an elignment with Paxos phase out for purchasing BUSD by February… pic.twitter.com/XiRPy71b3p
— Nu Brave (@NuBraveIN) August 30, 2023

In its statement, Binance said it is encouraging users to trade or convert their BUSD balances for First Digital USD (FDUSD) — a stablecoin launched in June by the Hong Kong-based trust company First Digital Group which had its debut listing on Binance in late July.

The exchange added BUSD to FDUSD trades and conversions are fee-free, and on Aug. 30 delisted eight BUSD pairs. The exchange has previously incentivized users to use the stablecoin with zero-fee trading pairs for FDUSD with Bitcoin (BTC) and Ether (ETH).

Binance's decision to halt BUSD support appears to follow the United States Securities and Exchange Commission on Feb. 13 alleged BUSD was an unregistered security in a wells notice it issued to Paxos.

The same day, the New York Department of Financial Services ordered Paxos to halt the issuance of BUSD.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

BUSD falls to fourth position among stablecoins

June 17, 2023 Coin Telegraph

Binance

After a dip of over $1 billion in the past 30 days, BUSD now sits at the fourth position in market capitalization among stablecoins.

The dollar-pegged Binance USD (BUSD) stablecoin sits now at the fourth position in market capitalization among other stablecoins following a dip of over $1 billion in the past 30 days, data from CoinMarketCap shows.

As of writing, BUSD market cap stands at $4.30 billion, down 29% from $5.54 billion on May 18. The stablecoin has been in a downward trend since December last year, when its market cap topped $23 billion.

*Top stablecoins by market capitalization on June 17. Source: CoinMarketCap*

The decline in BUSD market cap parallels major developments surrounding Binance following FTX's dramatic collapse in November 2022. Last December, a report indicating Binance would be targeted by the U.S. Department of Justice led to net withdrawals of $3.6 billion within seven days. The exchange saw large BUSD redemptions from market makers, including more than $245 million from Jump Finance.

A partnership between Binance and Paxos Trust created the BUSD stablecoin in September 2019. Paxos issues and owns the product, while Binance licenses its brand. For Paxos, the partnership brought new challenges. In February, the company was reportedly served a Wells Notice from the U.S. Securities and Exchange Commission alleging that Binance USD was an unregistered security.

The investigation led the New York Department of Financial Services (NYDFS) to order Paxos to stop the issuance of BUSD. Together, these episodes took a significant bite out of BUSD's market share, from $15.88 billion on February 12 to $8.38 billion on March 13.

The most recent blow came from the SEC lawsuit against Binance on June 5 for allegedly offering unregistered securities. The U.S. regulator pressed 13 charges against the exchange, including unregistered offers and sales of the BNB and BUSD tokens.

*Binance USD (BUSD) market share in 12 months. Source: CoinMarketCap.*

The market dominance of stablecoins pegged to the U.S. dollar has undergone some changes over the past year, with Tether (USDT) climbing back to its all-time high, while most stablecoins are declining.

Circle’s USD Coin (USDC) saw its market share decline from 34.88% in May 2022 to 23.05% in May 2023. Market participation of BUSD plunged from 11.68% to 4.18% in the same period, while Dai’s (DAI) share of the crypto market was at 3.66%, down from 4.05% in May 2022.

Tether's USDT, on the other hand, is gaining traction. The stablecoin’s market dominance stood at 65.89% in May, up from 47.04% a year ago. Its market capitalization has risen to $83.1 billion, while USDC’s market cap has dropped from a peak of $55 billion to $29 billion.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

Dai Flips BUSD To Become Third-Largest Stablecoin As Binance Stares Down Mounting Legal and Regulatory Setbacks

June 17, 2023 The Daily Hodl

SEC’s Binance suit contains heavy mix of predictable charges, novel revelations

June 5, 2023 Coin Telegraph

Binance

The world’s largest cryptocurrency exchange has been hit with an SEC suit that many saw coming, but the details will be studied closely.

The announcement of the United States Securities and Exchange Commission (SEC) suit against Binance, Binance.US and Binance CEO Changpeng Zhao (CZ) may have surprised the crypto community, but the SEC’s focus on the exchange was well known. The suit’s contents were met with a variety of reactions.

CZ claimed in a tweet on the morning of June 5, “Media gets the info before we do,” and the company had not seen the SEC complaint then. Evidence of scrambling behind the scenes may be seen in the two statements Binance issued in response to the suit.

The exchange called the suit “disappointing” in a blog post and emphasized the SEC’s failure to provide clarity and guidance, as well as its impact on financial innovation. A later statement distributed by email addressed legal issues more closely, claiming there was a lack of due process and promising a vigorous defense.

No one who was paying attention should have been taken unawares by the SEC’s complaint, Cory Klippsten, CEO of financial firm Swan Bitcoin, said of the allegations. He claimed in a statement to Cointelegraph:

“These practices of Binance have essentially been open secrets, so no one who operates in the space will be surprised by any of the charges.”

Some of the details will still raise eyebrows. The most quotable passage in the suit undoubtedly came from the unnamed Binance chief compliance officer in 2018, who said in a message to another company officer:

“We are operating as a fking unlicensed securities exchange in the USA bro.”

More light was shed on Brian Brooks’ brief tenure as CEO of Binance.US. Brooks, former U.S. comptroller of the currency and CEO of Binance.US for three months in 2021, is memorably quoted in the suit (as “CEO B” of BAM Trading). According to the SEC, Brooks said in testimony:

“[W]hat became clear to me at a certain point was CZ was the CEO of BAM Trading, not me. […] I realized, huh, I’m not actually the one running this company, and the mission that I believe I signed up for isn’t the mission. And as soon as I realized that, I left.”

The SEC has repeatedly claimed that nearly all cryptocurrencies are securities, so the list of 10 tokens may also be illuminating. There are familiar claims, such as that Filecoin (FIL) is a security. Algorand (ALGO) has also been singled out before.

For Solana (SOL), Cardano (ADA) and Polygon (MATIC), the Binance suit may be a warning shot, however.

And guess which tokens are illegal securities offerings. Spoiler alert it includes Solana and Cardano. pic.twitter.com/wMdICfIE3j
— Stephen Diehl (@smdiehl) June 5, 2023

There were already signs that a shakeup was underway at the exchange. Nearly simultaneously with the news of the SEC’s complaint, Bloomberg reported Richard Teng may be favored to replace CZ as the exchange’s next CEO. The news service cited “persons with direct knowledge.”

Teng was appointed to head all regional markets outside the U.S. on May 29. He joined Binance Singapore in August 2021, coming from the Financial Services Regulatory Authority at Abu Dhabi Global Market, where he was CEO, and “quickly rose through the ranks.”

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Tether USDT market cap breaks ATH, Binance CEO points at regulatory caps

June 1, 2023 Coin Telegraph

Binance

At a time when USDT is touching new market cap highs, other stablecoins are struggling to keep their market share.

The Tether (USDT) stablecoin has hit a new all-time-high (ATH) market capitalization of over $83 billion as its market dominance continues.

The new ATH market cap for USDT comes in a year when other stablecoin issuers struggle to stay afloat due to regulatory woes. The same was pointed out by cryptocurrency exchange Binance’s CEO Changpeng “CZ” Zhao.

*USDT market cap chart. Source: CoinMarketCap*

In a tweet, CZ drew attention to Binance USD (BUSD), the Binance-branded stablecoin issued by Paxos. The Binance CEO said BUSD, a fully regulated stablecoin, was “capped” by the New York Department of Financial Services (NYDFS) at $23 billion and currently sits at a $5 billion market cap, and since then, USDT has seen tremendous growth.

BUSD, a fully regulated stablecoin, was "capped" (no new minting) by NYDFS at $23b. Now at $5b market cap.

Since then, USDT has seen tremendous growth. https://t.co/KqBkDK71WS
— CZ Binance (@cz_binance) June 1, 2023

In February earlier this year, the New York Department of Financial Services (NYDFS) ordered Paxos to stop any new issuance of BUSD citing violations of security laws.

At a time when USDT has reached its ATH market cap, its competitors such as Circle-issued USD Coin (USDC) or Binance’s BUSD are struggling to maintain their market dominance. USDC the second largest stablecoin’s market cap stands at $28.8 billion with a difference of over $50 billion. For context, at one point UDC's market dominance was nearing that of USDT and its market cap reached an ATH of $55.8 billion in June 2022.

*USDC all time market cap chart. Source: Coinmarketcap*

While the prolonged bear market in 2022 took its toll on both the stablecoins which saw a decline in market cap after the June 2022 high. However, USDT has managed to bounce back with a higher market dominance while USDC’s market cap has been cut in nearly half.

The prominent reason for the decline in the market share of other stablecoins can be attributed to regulatory scrutiny shown by United States regulators added to the banking crisis. After a ban on new minting of BUSD alleging security violations, the BUSD market cap dropped rapidly as users started to convert their BUSD for other stablecoins.

Similarly for USDC, the major crisis came in the form of the collapse of the Silicon Valley Bank where the stablecoin issuer held about $3.3 billion in reserves. This led to market panic and a subsequent depegging from the U.S. dollar. Although USDC re-pegged the next day it took a significant toll on its market cap as many converted their USDC to other stablecoins in fear of a total crash.

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USDT market share jumps amid economic uncertainty, USDC shrinks

May 28, 2023 Coin Telegraph

Binance USD

Over the past year, Circle's USD Coin has seen its market share decline from 34.88% to 23.05%. Tether's USDT shows a contrasting picture.

The market dominance of stablecoins pegged to the United States dollar has undergone some changes over the past year. While most of them are in a downward trend, Tether (USDT) has climbed back to its all-time high, data from CoinGecko shows.

In the past 12 months, Circle's USD Coin (USDC) has seen its market share decline from 34.88% to 23.05% at the time of writing. Market participation of Binance USD (BUSD) plunged from 11.68% to 4.18% in the same period, while Dai (DAI) held its participation rate at 3.66%, down from 4.05% in May 2022.

Tether's USDT is moving in a contrasting trend. The stablecoin market dominance currently sits at 65.89% from 47.04% one year ago. Its market capitalization soared to $83.1 billion, while the USDC market cap dropped to $29 billion from its $55 billion peak.

In a recent interview with Bloomberg, Circle CEO Jeremy Allaire blamed the crypto crackdown by the United States regulators for the stablecoin's declining market capitalization. The current environment in the United States appears to be beneficial for Tether.

*USD Stablecoins by Market Dominance. Source: CoinGecko.*

The U.S. banking crisis led to USDC depegging in March as reserves worth $3.3 billion were stuck at Silicon Valley Bank, one of three crypto-friendly banks shut down by regulators. Despite Circle's assurances, the market quickly responded to the news, causing USDC to depeg from the dollar.

With the growing connection between the crypto space and traditional finance, stablecoins have become increasingly popular. A report released recently by the European Systemic Risk Board highlighted the need for more transparency in the digital assets market, specifically for stablecoin reserves.

Tether has been heavily criticized for lacking transparency over the past years. Owned by Hong Kong-based iFinex, the crypto firm was fined $18.5 million in 2021 by the New York Attorney General’s Office for allegedly misrepresenting the fiat backing for its reserves. As part of the settlement, the stablecoin issuer was also required to provide greater financial transparency.

Tether's leadership has fought back against the negative allegations on Twitter. Additionally, the company is seeking to reduce its exposure to the banking system following the collapse of Silicon Valley Bank. Its latest audit report shows Tether pulled over $4.5 billion out of banks in the first quarter of 2023, leading to a "substantial reduction" in counterparty risk amid the ongoing global economic uncertainty.

The company also boosted its U.S. Treasury bills to a new high of over $53 billion, or 64% of its reserves. Combined with other assets, USDT is now backed by 85% cash, cash equivalents and short-term deposits, according to the report.

A similar move has been made by Circle. The stablecoin operator reportedly adjusted its reserves to mitigate risk in the face of macroeconomic uncertainty, and no longer holds Treasuries maturing beyond early June.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

SEC’s war on crypto: How far will it go?

April 26, 2023 Coin Telegraph

Binance USD

The latest Cointelegraph Report tries to make sense of the Security and Exchange Commission's ongoing crypto crackdown, its rationale, and the potential outcome.

The Securities and Exchange Commission (SEC), led by Chairman Gary Gensler, has been at the forefront of the United States' cryptocurrency crackdown. In the last few months, the agency has filed several enforcement actions against major crypto companies that allegedly violated security laws.

Critics say the agency has adopted a regulation-by-enforcement approach without providing a proper set of rules that fit the unique features of crypto assets. A major source of confusion is the definition of a security and whether it can apply to a highly diverse set of assets such as cryptocurrencies.

Despite being pressured in a congressional hearing last week, Gensler seems unwilling to take on the political responsibility of entering a constructive dialogue with the industry.

For many crypto companies targeted by the SEC, the choice is between entering an expensive legal battle with the regulator or shutting down operations in the US and moving overseas. Most crypto companies will likely prefer saving millions of dollars in legal expenses and opt for the latter option.

To learn more about how the SEC has waged war on crypto and the potential consequences, check out the latest Cointelegraph Report on our YouTube channel, and don't forget to subscribe!

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