Akash Network is a decentralized peer-to-peer marketplace for cloud compute and provides a fast, efficient, and low-cost application deployment solution. Akash Network's native token (AKT), is used as a default mechanism to store and exchange value, govern and secure the blockchain while incentivizing its participants through rewards.

Akash Network

James Cirrone

SEC Chair Gary Gensler appeared on CNBC&#8217;s Squawk Box to discuss the recent lawsuits filed by the SEC against Binance and Coinbase. The lawsuits accuse both platforms of operating as unregistered securities exchanges.



Gensler’s main thrust was that Coinbase, Binance and other crypto exchanges are evading American regulation and that “there’s been clarity for years.”



“It&#8217;s fundamentally a lack of controls, deception, [and] conflicts,” Gensler said. “The whole business model is built on non compliance with the US securities laws and we&#8217;re asking them to come into compliance so they&#8217;re going a bit of ‘catch us if you can.’”



Gensler repeatedly touted the SEC’s claim that Binance CEO Changpeng Zhao <a href="https://blockworks.co/news/sec-allegations-against-binance">commingled customer funds with those of his trading firm Merit Peak Limited</a> as an example of why crypto exchanges need more oversight. Binance denied this allegation.



<a href="https://blockworks.co/tag/binance">Binance</a> was a continued target in the interview on CNBC, with fewer mentions of Coinbase. To that end, Gensler suggested that users should think twice about leaving their funds on Binance’s platform.



“Make no mistake, it is not proper custody to have funds and crypto securities on platforms like Binance,” he said.



Gensler also talked about the worth of certain crypto tokens, saying there’s a lot of debate about use cases.&nbsp;



When host Jim Cramer raised several questions about the value of the <a href="https://blockworks.co/news/sec-10-tokens-securities">coins listed as securities in the Binance complaint</a>, such as SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI, Gensler was much clearer.



“Look, we don&#8217;t need more digital currency. We already have digital currency. It&#8217;s called the US dollar. It&#8217;s called the euro. It&#8217;s called the yen. They&#8217;re all digital right now. We already have digital investments,” Gensler said.&nbsp;



He continued, “We have not seen over the centuries that economies or the public needs more than one way to move value.”



Despite his skepticism of a future where crypto exists alongside fiat currencies, Gensler added that, “if there&#8217;s a real value in these crypto tokens, then compliance will build trust and the business model might change” for crypto exchanges.



He further asserted that the <a href="https://blockworks.co/tag/sec">SEC</a>’s recent actions are “pro innovation,” striking back at Binance’s <a href="https://www.binance.com/en/blog/ecosystem/sec-complaint-aims-to-unilaterally-define-crypto-market-structure-8707489117122437402">claim</a> that his agency is undermining “America’s role as a global hub for financial innovation and leadership.”



“What we&#8217;re doing at the SEC is pro innovation because, without trust, the capital markets really don&#8217;t work,” Gensler said.&nbsp;



Gensler declined to talk about specific communications between the SEC and the companies in question, but said he remains ready to bring additional crypto exchanges into proper compliance.



In terms of the SEC’s goal in court, Gensler said that all it has to do is prove that one crypto token “is a security” and “should be properly registering.”



Gensler has been in the spotlight for months, as his agency ramps up enforcement against crypto companies. When he <a href="https://blockworks.co/news/gensler-house-financial-services-committee">testified before Congress back in April</a>, Gensler refused to answer whether <a href="https://blockworks.co/news/regulatory-clarity-ethereum-gensler">ether was a security or a commodity</a>.



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Gensler Says US Dollar Is Only Digital Currency We Need

Katherine Ross

In addition to the SEC’s lawsuit against Coinbase — which was filed Tuesday morning — 10 states announced a show cause order against Coinbase.&nbsp;



“The order gives Coinbase 28 days to show cause why they should not be ordered to cease and desist from selling unregistered securities in Alabama,” the Alabama Securities Commission <a href="https://asc.alabama.gov/News/2023%20News/6-6-2023_Coinbase.pdf">wrote</a>.&nbsp;



Securities regulators from California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin are also part of the state task force.&nbsp;&nbsp;



The show cause order from Alabama alleges that Coinbase “violates the securities law by offering its staking rewards program accounts to Alabama residents without a registration to offer or sell these securities.”



It goes on to claim that the “3.5 million staking rewards program accounts nationwide are not insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC),” which means that investors are not protected from losses.&nbsp;



Coinbase’s staking program offers five crypto assets including <a href="https://blockworks.co/price/XTZ">XTZ</a>, <a href="https://blockworks.co/price/ATOM">ATOM</a>, <a href="https://blockworks.co/price/ETH">ETH</a>, <a href="https://blockworks.co/price/ADA">ADA</a> and <a href="https://blockworks.co/price/SOL">SOL</a>.&nbsp;



The SEC pinpointed <a href="https://blockworks.co/news/sec-sues-coinbase">Coinbase’s staking program in its lawsuit,</a> claiming that, “the Staking Program includes five stakeable crypto assets, and the Staking Program as it applies to each of these five assets is an investment contract, and therefore a security.”



Read more: <a href="https://blockworks.co/news/sec-sues-coinbase-allegations">SEC Sues Coinbase: Here’s What They Allege Coinbase Did Wrong</a>



“At all relevant times, the Coinbase Staking Program, as it applied to each of the five stakeable assets, was an investment contract under Howey, and therefore a security, whose offers and sales were subject to registration under the Securities Act,” the suit goes on to say.



The SEC’s lawsuit also alleges that <a href="https://blockworks.co/tag/Coinbase">Coinbase</a> listed and sold unregistered securities.&nbsp;



Coinbase did not immediately respond to a request for comment.



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Coinbase Staking Program Targeted by Alabama Securities Regulator

With Coinbase joining Binance as the second cryptocurrency heavyweight sued by the SEC in roughly 24 hours, the industry is reeling.



And industry participants on Tuesday were amping up their efforts to digest the content — and the implications — of both landmark legal actions.&nbsp;



The SEC this week claimed that both <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">Binance</a> and <a href="https://blockworks.co/news/sec-sues-coinbase">Coinbase</a> have been operating unregistered exchanges and listing a number of individual tokens <a href="https://blockworks.co/news/sec-10-tokens-securities">the regulator has deemed unregistered securities</a>.&nbsp;



“But while paying lip service to its desire to comply with applicable laws, Coinbase has for years made available for trading crypto assets that are investment contracts under the Howey test and well-established principles of the federal securities laws,” the SEC claims.



Binance’s CEO, who took to Twitter on Monday after his company was served with the suit, was quick to play to the court of crypto public opinion in responding to the SEC’s suit against rival Coinbase.&nbsp;



Changpeng “CZ” Zhao tweeted, “If you have to pick a fight with everyone, maybe you are the one at fault.”&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">If you have to pick a fight with everyone, maybe you are the one at fault. 🤷‍♂️&mdash; CZ 🔶 Binance (@cz_binance) <a href="https://twitter.com/cz_binance/status/1666067006213222403?ref_src=twsrc%5Etfw">June 6, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In expounding upon the Coinbase suit, SEC Commissioner <a href="https://blockworks.co/tag/gary-gensler">Gary Gensler</a> via Twitter early on Tuesday doubled down on his agency’s legal opinion regarding <a href="https://blockworks.co/tag/binance">Binance</a> from the day prior.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC. <a href="https://t.co/FwpdmENvoL">https://t.co/FwpdmENvoL</a>&mdash; Gary Gensler (@GaryGensler) <a href="https://twitter.com/GaryGensler/status/1666059466750541825?ref_src=twsrc%5Etfw">June 6, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<a href="https://blockworks.co/news/gary-gensler-national-disgrace">Gensler</a> also agreed to interviews on both CNBC and Bloomberg scheduled for Tuesday morning.



<a href="https://blockworks.co/tag/jack-dorsey">Jack Dorsey</a>, in a tweet on Monday, seemingly projected cryptocurrency industry support on the heels of the SEC’s 136-page lawsuit against Binance, the exchange’s US affiliate, and founder Zhao. Dorsey, the chief executive of Block, has been a vocal advocate of cryptocurrencies — especially bitcoin.&nbsp;



Dorsey tweeted, “Steady lads.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Steady lads&mdash; jack (@jack) <a href="https://twitter.com/jack/status/1665804355478466560?ref_src=twsrc%5Etfw">June 5, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Dan Raju, CEO of fintech company Tradier, told Blockworks that greater and clearer crypto regulation by the SEC is long overdue.&nbsp;&nbsp;



“The latest move by the SEC indicates that over time crypto offerings will be regulated and controlled similar to the traditional stack of participants in the equities market,” he said. “I also believe that while in the short run they may have an impact on crypto prices, it will only create retail confidence on crypto in the long term.”



Prior to the <a href="https://blockworks.co/tag/SEC">SEC</a>’s latest move against <a href="https://blockworks.co/tag/coinbase">Coinbase</a>, Paul Grewal, the exchange’s chief legal officer, laid out his ideal framework for more clear rules and regulations around digital assets. Coinbase has repeatedly asked the SEC for updated digital asset guidance.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">How we define digital assets is critical for enabling innovation. Digital assets are diverse, and if we fail to effectively draw clear definitions of which assets are securities, which are commodities, and which are neither, crypto will continue to sit in regulatory limbo.&mdash; paulgrewal.eth (@iampaulgrewal) <a href="https://twitter.com/iampaulgrewal/status/1665859403520655360?ref_src=twsrc%5Etfw">June 5, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Grewal is set to appear before the House Committee on Agriculture to discuss the Digital Asset Market Structure Discussion Draft Tuesday morning.



Kristin Smith of The Blockchain Association was unimpressed with the latest salvo from the SEC, noting that the regulator doesn&#8217;t &#8220;make the law &#8211; it only makes accusations.&#8221;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The following statement is attributed to Blockchain Association CEO <a href="https://twitter.com/KMSmithDC?ref_src=twsrc%5Etfw">@KMSmithDC</a>: “The SEC doesn’t make the law – it only makes accusations – and we’re confident the courts will prove Chair Gensler wrong in due time. “Contrary to what Chair Gensler says, there is no regulatory… <a href="https://t.co/EyApCJoDqI">pic.twitter.com/EyApCJoDqI</a>&mdash; Blockchain Association (@BlockchainAssn) <a href="https://twitter.com/BlockchainAssn/status/1666089878940176388?ref_src=twsrc%5Etfw">June 6, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h2>Did the SEC give “Binance some slack?”</h2>



Traders this week have once again been asking why Coinbase was even allowed to go public in 2021 — considering that the SEC claims that it’s been offering the sale of unregistered securities as well as operating as an unregistered broker since 2019.&nbsp;



“In fact, by suing Coinbase they pretty much just gave Binance some slack to win against their lawsuit as well; since they can just delay until Coinbase finishes and then cite Coinbase&#8217;s case,” @WolfOfPoloniex tweeted.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">So in SEC&#39;s complaint vs Coinbase, it states that they&#39;ve been acting as an unregistered broker since 2019. Yet&#8230;. the on April 14th, 2021 <a href="https://twitter.com/search?q=%24COIN&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$COIN</a> became a public company on the Nasdaq. How on God&#39;s green earth do they possibly believe this lawsuit will ever hold up in court?… <a href="https://t.co/tYyEroRN6F">pic.twitter.com/tYyEroRN6F</a>&mdash; The Wolf (@WolfOfPoloniex) <a href="https://twitter.com/WolfOfPoloniex/status/1666061923778187265?ref_src=twsrc%5Etfw">June 6, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Crypto analyst Miles Deutscher had similar concerns, tweeting, “So you’re telling me that the SEC let an ‘unregistered broker’ IPO &#8211; after carrying out due diligence?”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">So, let me get this straight. The SEC says that “Coinbase has operated as an unregistered broker since 2019”. Yet Coinbase IPOd in April 2021. So you’re telling me that the SEC let an &quot;unregistered broker&quot; IPO &#8211; after carrying out due diligence? Well done Gary. 👏&mdash; Miles Deutscher (@milesdeutscher) <a href="https://twitter.com/milesdeutscher/status/1666061714411106306?ref_src=twsrc%5Etfw">June 6, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



After <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation">receiving a Wells notice</a> from the SEC in March, Coinbase said it would defend itself against a regulator it says is going beyond its authority. &nbsp;



CEO Brian Armstrong said in a Twitter Space soon after the Wells notice that <a href="https://blockworks.co/news/coinbase-happy-to-go-to-court-with-sec">the courts might be able to offer clarity</a> on this matter.&nbsp;



Coinbase <a href="https://blockworks.co/news/coinbase-q1-stats-stand-out">dropped its net loss to $79 million</a> during the first quarter — down from $557 million in the last three months of 2022 — as it sought to reel in spending. The company said it expected costs to rise in the second quarter, in part due to legal expenses.



Ben Strack contributed reporting. 



Updated June 6, 2023 at 10:21 am ET: Added comment from Dan Raju, CEO of fintech company Tradier. Added comment from Kristin Smith of The Blockchain Association.



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CZ, Jack Dorsey React to Coinbase and Binance Lawsuits

Macauley Peterson

The Ethereum blockchain explorer Etherscan has rolled out a new advanced filtering feature that expands the tool kit available for reading on-chain data.



The new feature, in beta, makes it easier to search for specific information directly on the <a href="https://blockworks.co/tag/data-analytics" target="_blank" rel="noreferrer noopener">data analytics</a> platform, without needing to run specialized queries in analytics dashboards such as <a href="https://blockworks.co/tag/dune-analytics" target="_blank" rel="noreferrer noopener">Dune Analytics</a>, which require knowledge of SQL.



Etherscan serves as a powerful microscope for the blockchain that empowers researchers to uncover valuable insights into transaction histories.



It has been operating since 2015 as a free and open-source project “with the mission of providing equitable access to blockchain data,” according to its <a href="https://etherscan.io/aboutus" target="_blank" rel="noreferrer noopener">About Us</a> page.



The Advanced Filter beta currently supports filtering by various criteria, including transaction type, method, from or to addresses, types and amounts of assets.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Advanced Filter enables you to analyse a variety of transactions within a single view Filter by transaction type, function name, duration, amounts, assets and from &amp; to addresses <a href="https://t.co/6GYbWIxG7q">pic.twitter.com/6GYbWIxG7q</a>&mdash; Etherscan (@etherscan) <a href="https://twitter.com/etherscan/status/1664589461060227072?ref_src=twsrc%5Etfw">June 2, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



With an Etherscan login, you can save filtered queries for later use.



For instance, you might want to see withdrawals larger than $1 million in USDC from Binance <a href="https://etherscan.io/advanced-filtered?txntype=2&amp;fadd=0x28c6c06298d514db089934071355e5743bf21d60&amp;tadd=&amp;tkn=0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48&amp;amt=1M%7eMAX&amp;age=24H" target="_blank" rel="noreferrer noopener">over the past 24 hours</a>, to gauge customer reaction to <a href="https://blockworks.co/news/binance-execs-unlicensed-securities-exchange">Monday’s SEC lawsuit</a>.



The tool will be a boon for on-chain sleuths like ZachXBT and MyCrypto founder Taylor Monahan in efforts to track down scammers and thieves and their victims more efficiently.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">yeah sex is great an all but have you ever been tracing funds at 4am and suddenly been granted the magical ability to filter up and down a fat list of txns and hop from victim to thief instantly and share a link to it instead of taking yet another unsearchable screenshot 🤤🤤&mdash; Tay 💖 (@tayvano_) <a href="https://twitter.com/tayvano_/status/1664591535374204928?ref_src=twsrc%5Etfw">June 2, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Among many use-cases, it should come in handy for tasks like piecing together data for tax filing purposes or more fanciful endeavors like checking the latest <a href="https://etherscan.io/advanced-filtered?fadd=0x47a37ea6b691eb76aaf771d5bdbba2ca68add173&amp;tadd=0x47a37ea6b691eb76aaf771d5bdbba2ca68add173&amp;txntype=0&amp;mtd=0x11dabc93%7eCreate_bid&amp;amt=1-10" target="_blank" rel="noreferrer noopener">auction bids</a> for <a href="https://www.thellamas.io/" target="_blank" rel="noreferrer noopener">The Llamas</a> NFT collection.



The feature is still somewhat limited — you can’t dial in specific amount ranges, or sort and export results, for instance —&nbsp;but the Etherscan team expects to update it with improvements based on user feedback.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This is a Beta release, some limitations include: &#8211; Poor reputation tokens, ignore list tokens, and failed transactions displayed with no option to hide them &#8211; From and To addresses are only joined by OR operator Let us know what you&#39;d like us to add or improve! 🙏&mdash; Etherscan (@etherscan) <a href="https://twitter.com/etherscan/status/1664589479917813761?ref_src=twsrc%5Etfw">June 2, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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Etherscan Advanced Filter Feature Helps On-chain Sleuths

Casey Wagner

Coinbase shares dipped about 16% during pre-market trading Tuesday morning in New York following news that the SEC has charged the exchange for allegedly violating securities laws. 



The crash comes one day after Coinbase shares posted a 9% drop on Monday during the regular trading session, following news that <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges" target="_blank" rel="noreferrer noopener">rival exchange Binance had been sued by the securities regulator</a>.&nbsp;



<a href="https://blockworks.co/price/COIN">COIN</a>, which has dropped more than 80% since its direct listing in April 2021, has managed a substantial rebound since the start of the year, rallying around 75% year to date. <a href="https://blockworks.co/news/sec-sues-coinbase" target="_blank" rel="noreferrer noopener">Tuesday’s news</a> sent shares below the $60 level analysts have been watching. 



Read more: <a href="https://blockworks.co/news/sec-sues-coinbase-allegations">SEC Sues Coinbase: Here’s What They Allege Coinbase Did Wrong</a>



As of Monday, analysts surveyed by MarketBeat gave Coinbase a hold rating.&nbsp;



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/14035413/embed#?secret=feRm2cMJ5b" data-secret="feRm2cMJ5b" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Coinbase stock is now underperforming bitcoin and ether year to date</figcaption></figure>



Bitcoin (<a href="https://blockworks.co/news/price/BTC">BTC</a>) and ether (<a href="https://blockworks.co/price/ETH">ETH</a>) moved slightly into the red on the news, dipping about 0.6% and 0.1%, respectively. The drop was substantially less than Monday’s decline, where <a href="https://blockworks.co/news/markets-red-after-sec-binance">both tokens lost around 2%</a> after the SEC announced its Binance suit. 



The SEC names <a href="https://blockworks.co/tag/coinbase">Coinbase</a> and its holding company CGI as defendants in the suit. The regulator alleges defendants broke securities laws by operating the exchange and brokerage without registration. 



“Since at least 2019, through the Coinbase Platform, Coinbase has operated as: an unregistered broker, including by soliciting potential investors, handling customer funds and assets, and charging transaction-based fees; an unregistered exchange,” court documents released Tuesday read.&nbsp;



The <a href="https://blockworks.co/tag/SEC">SEC</a> also claims that at least 13 tokens listed on Coinbase are securities. In its Binance complaint, the agency similarly listed <a href="https://blockworks.co/news/sec-10-tokens-securities">10 tokens as “crypto asset securities</a>.” Both lawsuits list Solana’s <a href="https://blockworks.co/price/SOL">SOL</a> token and Cardano’s <a href="https://blockworks.co/price/ADA">ADA</a> as securities.



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Coinbase Stock Tanks 16% Following SEC Lawsuit 

Coinbase is being sued by the SEC just a day after the SEC went after the world’s largest crypto exchange, Binance.&nbsp;



The <a href="https://blockworks.co/news/sec-sues-coinbase">SEC alleges that Coinbase operated</a> as an unregistered broker and sold unregistered securities — which are both allegations that have been <a href="https://blockworks.co/news/sec-allegations-against-binance">directed toward Binance as well</a>. 



The claims go back to 2019, despite the fact that <a href="https://blockworks.co/tag/Coinbase">Coinbase</a> was allowed to go public in 2021.  



Here’s a list of the claims the <a href="https://blockworks.co/tag/SEC">SEC</a> is making against Coinbase.  



<h2>Unregistered broker </h2>



The SEC alleges that “since at least 2019, through the Coinbase Platform, Coinbase has operated as: an unregistered broker, including by soliciting potential investors, handling customer funds and assets, and charging transaction-based fees; an unregistered exchange, including by providing a market place that, among other things, brings together orders of multiple buyers and sellers of crypto assets and matches and executes those orders; and an unregistered clearing agency, including by holding its customers’ assets in Coinbase-controlled wallets and settling its customers’ transactions by debiting and crediting the relevant accounts.”



<h2>Unregistered “securities”</h2>



In the complaint, the SEC states that 13 crypto assets are “securities” including <a href="https://blockworks.co/price/SOL">SOL</a>, <a href="https://blockworks.co/price/ADA">ADA</a>, <a href="https://blockworks.co/price/MATIC">MATIC</a>, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO.



While there is some overlap between the allegations against Coinbase and those against Binance, some of these assets are newly-designated as securities by the SEC. It is unclear if the SEC has reached out to, or discussed, these designations with the token issuers.



The SEC targeted SOL, ADA, AXS, MATIC, FIL and SAND in <a href="https://blockworks.co/news/sec-10-tokens-securities">its lawsuit against Binance</a>.



<h2>Service targeted: Wallet, Staking and Prime </h2>



The Staking program offered by Coinbase allows investors to stake five crypto assets – XTZ, ATOM, ETH, ADA and SOL. 



The SEC claims that this service means that Coinbase is offering the sale of unregistered securities and that “Coinbase has deprived investors of material information about Coinbase and its Staking Program offerings, including how Coinbase uses the offering proceeds and the risks and trends that affect the enterprise and an investment in these securities.”



“At all relevant times, the Coinbase Staking Program, as it applied to each of the five stakeable assets, was an investment contract under Howey, and therefore a security, whose offers and sales were subject to registration under the Securities Act,” the suit claims.



Coinbase Wallet is another service that the SEC alleges was selling unregistered securities.&nbsp;



“Coinbase has carried out these functions despite the fact that the crypto assets it has Case made available for trading on the Coinbase Platform, Prime, and Wallet have included crypto asset securities, thus bringing Coinbase’s operations squarely within the purview of the securities laws. CGI—Coinbase’s parent company to which Coinbase’s revenues flow—is a control person of Coinbase and thus violated the same Exchange Act provisions as Coinbase,” the SEC claimed.



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SEC Sues Coinbase: Here’s What They Allege Coinbase Did Wrong

The SEC is suing Coinbase a day after it <a href="https://blockworks.co/news/sec-allegations-against-binance">went after Binance</a>.



In the lawsuit, filed on Jun. 6, the <a href="https://blockworks.co/tag/sec">SEC</a> alleges that Coinbase has been operating as an unregistered exchange.&nbsp;



The SEC names <a href="https://blockworks.co/tag/coinbase">Coinbase</a> and CGI — Coinbase’s holding company — as defendants in the suit. The lawsuit alleges:



“Since at least 2019, through the Coinbase Platform, Coinbase has operated as: an unregistered broker, including by soliciting potential investors, handling customer funds and assets, and charging transaction-based fees; an unregistered exchange, including by providing a market place that, among other things, brings together orders of multiple buyers and sellers of crypto assets and matches and executes those orders; and an unregistered clearing agency, including by holding its customers’ assets in Coinbase-controlled wallets and settling its customers’ transactions by debiting and crediting the relevant accounts.&#8221;



The commission also claims that <a href="https://blockworks.co/news/coinbase-hits-back-at-sec-over-staking-as-a-service" target="_blank" rel="noreferrer noopener">staking-as-a-service products offered</a> by Coinbase are in violation of the Securities Act of 1933 because “the Staking Program includes five stakeable crypto assets, and the Staking Program as it applies to each of these five assets is an investment contract, and therefore a security.”



Similar to the <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges" target="_blank" rel="noreferrer noopener">Binance suit filed</a> on Jun. 5, the SEC is alleging that Coinbase did not ensure that the crypto assets being sold were not securities as <a href="https://blockworks.co/news/ava-labs-howey-test-wrong" target="_blank" rel="noreferrer noopener">defined by the Howey test</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/sec-allegations-against-binance">The SEC Allegations Against Binance: How Bad Is It?</a>



“But while paying lip service to its desire to comply with applicable laws, Coinbase has for years made available for trading crypto assets that are investment contracts under the Howey test and well-established principles of the federal securities laws,” the SEC claims.



<ul>
<li>In the suit, the SEC labels 13 crypto assets as securities, specifically SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO.&nbsp;</li>



<li>In the Binance lawsuit, <a href="https://blockworks.co/news/sec-10-tokens-securities">the SEC named SOL</a>, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI, as well as Binance’s native tokens, <a href="https://blockworks.co/price/BNB">BNB</a> and <a href="https://blockworks.co/price/BUSD">BUSD</a>.</li>
</ul>



The lawsuit is the latest in an ongoing battle between Coinbase and the SEC. The exchange was <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation">served with a </a><a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation" target="_blank" rel="noreferrer noopener">Wells notice</a> earlier this year, which led Coinbase to <a href="https://blockworks.co/news/coinbase-sec-rulemaking-petition" target="_blank" rel="noreferrer noopener">sue the SEC</a>, asking for regulatory clarity. 



When the court <a href="https://blockworks.co/news/court-sec-deadline-coinbase" target="_blank" rel="noreferrer noopener">ordered the SEC to respond</a>, the regulator said that Coinbase could not make demands for regulatory clarity.&nbsp;



“The SEC&#8217;s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance. The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual,” Coinbase Chief Legal Officer Paul Grewal told Blockworks via email.



Updated June 6, 2023 at 10:11 am ET: Added comment from Coinbase&#8217;s Paul Grewal.



Updated June 6, 2023 at 8:38 am ET: Added context throughout.



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SEC Sues Coinbase for Alleged Securities Violations

Shalini Nagarajan

Data indicates Binance users have overall withdrawn almost $1.5 billion from the crypto exchange over the past day, as the firm grapples with a fresh Securities and Exchange Commission lawsuit over <a href="https://blockworks.co/news/binance-execs-unlicensed-securities-exchange" target="_blank" rel="noreferrer noopener">alleged securities violations</a>.



The SEC claimed the exchange and its CEO Changpeng Zhao lured US customers to their unregulated platform and mixed investors&#8217; funds with their own.



Assets on the platform last stood at just under $60.5 billion, according to <a href="https://defillama.com/cexs" target="_blank" rel="noreferrer noopener">DeFiLlama</a>.



In its lawsuit, the SEC <a href="https://blockworks.co/news/sec-allegations-against-binance" target="_blank" rel="noreferrer noopener">alleged</a> 10 cryptocurrencies including binance coin (<a href="https://blockworks.co/price/bnb" target="_blank" rel="noreferrer noopener">BNB</a>), its branded stablecoin <a href="https://blockworks.co/price/busd" target="_blank" rel="noreferrer noopener">BUSD</a>, as well as staking investment products offered on Binance.US are all <a href="https://blockworks.co/news/sec-10-tokens-securities" target="_blank" rel="noreferrer noopener">considered unregistered securities</a>.



The SEC also claimed Zhao directed creation of a plan to help wealthy customers evade US regulations. This involved using VPNs to hide their US locations and submitting compliance documents to conceal their true country of origin.



“We do need to let users know that they can change their KYC on Binance.com and continue to use it. But the message, the message needs to be finessed very carefully because whatever we send will be public. We cannot be held accountable for it,” Zhao allegedly told senior Binance officials in 2019.



According to Konstantin Horejsi, chief product officer at digital asset trading platform Blocktrade, the outflows from Binance are likely to have mostly gone to US residents.&nbsp;



This is expected, Horejsi explained, due to the potential for frozen user assets. Although it&#8217;s considered unlikely, frozen assets can result in capital being locked away for a long time — which would lead to legal and bureaucratic challenges for Binance users.



“Projects operating on a chain that may face potential prohibition in the US might consider switching their infrastructure layer. This reduction in speculative value of the BNB chain and token price has consequently led to some outflows triggered by BNB fire sales,” he told Blockworks.



BNB immediately tanked up to 9% following word of the SEC’s charges, while bitcoin dropped up to 5%.



<h2>Binance users have pulled loads of funds before</h2>



Horejsi noted that Binance has dealt with days of large outflows in the past and has handled them well.&nbsp;



“Therefore, I wouldn&#8217;t be overly concerned about their ability to meet the outflow demands,” he said. Blockworks has reached out to Binance for comment.



Following the <a href="https://blockworks.co/news/bitcoin-and-ether-are-commodities-says-cftc-in-binance-lawsuit" target="_blank" rel="noreferrer noopener">lawsuit filed against</a> Binance by the Commodity Futures Trading Commission in March, the exchange <a href="https://www.wsj.com/articles/binance-sees-2-billion-in-outflows-as-troubles-compound-9a136e21" target="_blank" rel="noreferrer noopener">reportedly</a> witnessed net outflows of $2.1 billion over a span of seven days.



Horejsi said that traders are now increasingly inclined to seek out regulated and audited exchanges rather than solely opting for convenience.



“In my opinion, Coinbase and Kraken are primarily benefiting from this trend in the US market. However, for international users, trust in Binance remains relatively high,” he said.



For what it&#8217;s worth, Binance expressed disappointment with the SEC&#8217;s charges and claimed they came as a surprise. The exchange said it had been actively cooperating and engaging in good-faith negotiations.



“The SEC’s choice is disheartening for Binance, its users, and the industry as a whole.&nbsp;However, this action will not stop us from continued robust collaboration with other regulators and policymakers across the globe, and we will continue to vigorously defend our business and this technology,” a spokesperson said.



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Binance Users Pull $1.5B Amid Sweeping SEC Charges

The Commodity Futures Trading Commission (CFTC) has given the green light for Cboe Global Markets to offer crypto more products as a derivatives clearing organization under the Commodity Exchange Act.



Cboe Digital, a platform that handles crypto spot and crypto derivatives markets, received the go-ahead to provide leveraged derivatives once the contracts are introduced in the latter half of the year.



The updated order allows Cboe Clear to offer clearing services for digital asset futures on a margin basis to futures commission merchants. This is in addition to the previously authorized fully collateralized futures and swaps, according to a Monday <a href="https://www.cftc.gov/PressRoom/PressReleases/8712-23" target="_blank" rel="noreferrer noopener">statement</a>.



Cboe Digital also supports spot trade for cryptocurrencies including bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>), bitcoin cash (<a href="https://blockworks.co/price/bch" target="_blank" rel="noreferrer noopener">BCH</a>), ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>), litecoin (<a href="https://blockworks.co/price/ltc" target="_blank" rel="noreferrer noopener">LTC</a>) and <a href="https://blockworks.co/price/usdc" target="_blank" rel="noreferrer noopener">USDC</a>.



CFTC Commissioner Christy Goldsmith Romero <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/romerostatement060523b" target="_blank" rel="noreferrer noopener">said</a> the updated registration order lets Cboe clear more crypto futures contracts, while implementing careful risk-reducing measures.



Cboe’s application is quite unlike FTX’s application for a direct-to-customer market structure without any middlemen, according to Romero. FTX’s application was withdrawn after the company filed for bankruptcy in November.



“The proposed FTX model was never adopted by the Commission, but it put at risk customers’ bankruptcy priority, other customer protections, and financial stability,” she said.



Cboe&#8217;s clearinghouse has been registered with the Commission since 2019. Its parent company Cboe, headquartered in Chicago, has over 50 years of experience running exchanges in regulated futures, options, foreign exchange, and equities markets, she added.



Shortly after acquiring crypto exchange and clearinghouse ErisX last year, Cboe Digital <a href="https://blockworks.co/news/cboe-to-add-slate-of-partners-to-grow-digital-asset-business" target="_blank" rel="noreferrer noopener">partnered</a> with companies like Jump Crypto, Interactive Brokers, and Robinhood to expand its digital asset business.



“We’ll integrate only where it makes sense, but we realize that in this asset class we need to move quickly,” Cboe COO Chris Isaacson <a href="https://blockworks.co/news/cboe-sees-need-to-move-quickly-in-crypto-following-exchange-acquisition" target="_blank" rel="noreferrer noopener">told</a> Blockworks after the closing of the ErisX deal. “Keeping that agility with this wholly-owned subsidiary is a great move.”  



Cboe said it intended to create a digital advisory committee composed of the partner firms.



There’s currently $11.95 billion in bitcoin open interest and $6.17 billion in ether open interest across 12 platforms, excluding Cboe Digital’s ErisX, per <a href="https://www.coinglass.com/BitcoinOpenInterest" target="_blank" rel="noreferrer noopener">CoinGlass</a>.



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Amid Crypto Chaos, CFTC Approves Cboe For Futures Margin Trade

US federal prosecutors got their way in the Reginald Fowler case, with a New York judge imposing an approximately six-year prison term on the convicted crypto fraudster.&nbsp;



Fowler’s sentence stemmed from the fact that he “evaded federal law by processing hundreds of millions of dollars of unregulated transactions on behalf of cryptocurrency exchanges as a shadow bank,” US Attorney Damian Williams said in a statement on Monday.&nbsp;



Prosecutors in April <a href="https://blockworks.co/news/reggie-fowler-shadow-bank-crypto-capital-corp">pushed for a seven-year prison term</a>, plus fines amounting to over $720 million.&nbsp;



The bank fraud is tied to Fowler’s time running Global Trading Solutions (GTS). The former Minnesota Vikings minority owner pleaded guilty last April to lying to banks in order to process more than $700 million in “unregulated” crypto transactions, the Southern District of New York said in a <a href="https://www.justice.gov/usao-sdny/pr/former-co-owner-minnesota-vikings-sentenced-75-months-prison-providing-shadow-banking">statement</a>.&nbsp;



“Fowler evaded federal law by processing hundreds of millions of dollars of unregulated transactions on behalf of cryptocurrency exchanges as a shadow bank,” Williams said. “He did so by lying to legitimate U.S. financial institutions, which exposed the U.S. financial system to serious risk.”



The shadow bank, Crypto Capital Corp, was established to process transactions for crypto startups operating by choice or necessity outside of the traditional banking system.&nbsp;



Bitfinex was also wrapped up with Crypto Capital, <a href="https://blockworks.co/news/reggie-fowler-shadow-bank-crypto-capital-corp">giving the payment processing firm $850 million</a> to process customer withdrawals. New York Attorney General Letitia James alleged in 2021 that <a href="https://blockworks.co/news/tethers-settlement-with-the-nyag-a-positive-for-industry">Tether loaned Bitfinex the $850 million</a> to cover the loss.&nbsp;



Prosecutors said Fowler personally opened dozens of accounts that processed crypto transactions without the knowledge of the banks involved.&nbsp;&nbsp;



Fowler has been ordered to forfeit $740.2 million of the proceeds.



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Reggie Fowler Gets Over 6 Years for Crypto Scheme, Ordered to Forfeit $740M

The SEC’s lawsuit against Binance <a href="https://blockworks.co/news/sec-allegations-against-binance">makes a number of allegations against the world’s largest crypto exchange</a> as well as the other defendants – which include CEO Changpeng Zhao.&nbsp;



In the lawsuit, the <a href="https://blockworks.co/tag/SEC">SEC</a> cites internal communications, including emails and various quotes from <a href="https://blockworks.co/tag/binance">Binance</a> employees.



The SEC is <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">claiming that Binance, alongside BAM Trading and CZ</a>, violated securities laws.&nbsp;



<a href="https://blockworks.co/news/binance-pushes-back-sec-lawsuit">Binance, however, disputes the claims</a> calling them both “disheartening” and “disappointing.”



In a common US regulatory practice, the SEC in its suit refers to employees of Binance and its affiliates by their job titles — without identifying them.



Here’s what the SEC is claiming that Binance employees have said in relation to its claims.



<h2>Changpeng Zhao&nbsp;</h2>



Zhao is named throughout the suit — both in quotes, and because he’s a defendant.



He allegedly pushed Binance to “encourage customers to circumvent Binance’s geographic blocking of U.S.-based IP addresses by using a VPN service to conceal their U.S. location.” And the CCO drafted a “VIP handling document” which “instructed Binance employees to make sure the U.S. customers opened new accounts ‘with no US documents allowed’ and to inform the customer ‘to keep this confidential.’” 



“We don’t want to lose all the VIPs which actually contribute to quite a large number of volume. So ideally we would help them facilitate registering companies or moving the trading volume offshore in some way—in a way that we can accept without them being labeled completely U.S. to us,” Zhao allegedly said in June 2019 during a “weekly meeting of senior Binance officials.”



In a meeting a few days later, Zhao said, “We do need to let users know that they can change their KYC [know-your-customer information] on Binance.com and continue to use it. But the message, the message needs to be finessed very carefully because whatever we send will be public. We cannot be held accountable for it.”



“A few days later, Binance’s Chief Marketing Officer reported that the team had reached out to the top 22 U.S. VIP customers and that 19 had “already agreed to change KYC, or change their IP,” the lawsuit said in the sole mention of the CMO.



<h2>Binance’s CCO</h2>



One of the most quoted people in the 136-page lawsuit is a Binance CCO.



The quote that will probably become infamous is one from December 2018: “We are operating as a fking unlicensed securities exchange in the USA bro.”



But they also allegedly said that “we do not want [Binance].com to be regulated ever.” Going on to say, per a screenshot included in the suit, that Binance “created local entities to be registered with the regulators, and ringfence accordingly. So BAM, BAS, etc. These are entities that are regulated/licensed.”



In a communication from 2020, a screenshot shows a Binance CCO allegedly saying that “on the surface, we cannot be seen to have US users, but in reality, we should get them through other creative means.”



In relation to the alleged VIP handling, the CCO is quoted as saying, “[W]e ask them to onboard with US, and then if their volume is really very big … we will push hard on .com side to accept it on an exceptional basis … we always have a way for whales … either we do it, or [a competitor crypto trading platform] does it.”&nbsp;



The CCO allegedly went on to add, “CZ will definitely agree to this lol … I have been briefed by top management to always find a way to support biz.”



<h2>Binance CFO</h2>



A Binance chief financial officer allegedly told Zhao that the ‘first goal’ was “to protect [Binance].com from U.S. regulatory engagement.” To do so, he noted that Binance will need to launch a new US crypto asset platform, and that “the main goal for that one is to limit the loss of users from the U.S.”&nbsp;



The lawsuit also includes 2019 conversations between the CCO and the CFO over listing BNB on the Binance.US platform.



“In an internal chat in September 2019, the Binance CFO and the Binance CCO agreed that “CZ [wa]s willing to take the legal risk in listing BNB, if [they could] find a way to quantify it,” the lawsuit claims.&nbsp;



“Cutting US from .com already [cost] him an arm/leg, he’s not gonna hold back on getting that rev[enue] back somehow,” the CCO is quoted as saying in response.



In the event of either a Wells notice or subpoena — which both the CFO and the CCO allegedly acknowledged were possible following the SEC’s enforcement action against Kik Interactive — reportedly said that they would “start prepping everything” which included a “war chest.”



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Binance Executives Claimed to Operate as ‘Unlicensed Securities Exchange’: SEC Lawsuit

Ben Strack

Several miners reported higher bitcoin production in May as a result of higher transaction fees that have since returned to more normal levels.&nbsp;



The Bitcoin network has been very active over the past month due to a surge in Ordinals and BRC-20 activity, according to <a href="https://www.blockworksresearch.com/">Blockworks Research</a> Analyst <a href="https://twitter.com/0xpibblez?lang=en">Spencer Hughes</a>.&nbsp;



Ordinals, an NFT protocol that <a href="https://blockworks.co/news/cant-ignore-bitcoin-nfts">launched on Bitcoin mainnet</a> in January, contributed to <a href="https://blockworks.co/news/bitcoin-transactions-record-ordinals">bitcoin transaction increases</a> that started at the end of April.&nbsp;



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="2312" height="892" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=1024&amp;h=1024" alt="" class="wp-image-57919" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=2312 2312w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/May-Block-Fees.jpg?w=80 80w" sizes="(max-width: 2312px) 100vw, 2312px" /></figure>



“Speculators have been keen to mint any project that arises on Bitcoin and often set high transaction fees to prioritize their place in the mint process,” Hughes said. “As more centralized exchanges, such as Binance and OKX, add Ordinals support, it is possible that this trend is just warming up.”



Marathon Digital mined a record 1,245 bitcoins in May — up 77% month over month.



A “significant increase” in transaction fees accounted for roughly 11.8% of the total bitcoin the company earned last month, Marathon CEO Fred Thiel said in a statement.&nbsp;



“The emergence of Ordinals significantly increased transaction fees in May, which in some cases, were so high that they exceeded the <a href="https://argoblockchain.com/articles/explaining-the-bitcoin-block-reward">6.25 BTC block reward</a>,” he added. “While such abnormally high transaction fees are historically rare, we believe these events can serve as a positive sign for the future of mining economics.”



CleanSpark too saw a boost in the amount of bitcoin mined last month, as its output jumped from 524 in April to 609 in May. The company said Friday it surpassed $100 million in year-to-date revenue.



CleanSpark CEO Zach Bradford said transaction fees were elevated because of increased interest in Ordinals for about five days in May. The company’s daily bitcoin production nearly doubled from 18 BTC to 30 BTC at the peak of this spike, but have since normalized. 



Nishant Sharma, founder of bitcoin mining research and consulting firm BlocksBridge, told Blockworks: “Although the unusual on-chain acidity resulted only in a temporary surge in transaction fees, the event gave us a glimpse of the future when transaction fees form the major portion of rewards for miners.”&nbsp;



While higher transaction counts, block congestion and transaction urgency drove up fees paid to miners as high as 40% of total miner revenue in early May, the “speculative frenzy of ordinals/BRC-20 inscription” cooled off later in the month, Compass Point Research &amp; Trading Analysts Chase White and Joe Flynn wrote in a May 26 research note.



Miner fee revenue had dropped back down to about 7% of total miner revenue at that point, they added.&nbsp;



“But we view ordinals/inscriptions as a positive development that has the potential to address long-term security concerns as it relates to the security of the BTC network and the incentivization of BTC miners, post halving events,” White and Flynn wrote.&nbsp;



Riot Platforms produced 676 BTC in May, which was roughly 6% higher than its generation of 639 BTC in April.



Core Scientific, a crypto mining company that <a href="https://blockworks.co/news/bitcoin-miner-core-scientific-to-file-bankruptcy-stock-tanks-30">filed for bankruptcy</a> in December, self-mined 1,314 in May — up nearly 17% from April.&nbsp;&nbsp;



The two companies did not mention transaction fees in their monthly production reports. Spokesperson for the firms did not immediately return requests for comment.



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Higher Bitcoin Transaction Fees Spur Good Month for Miners

As the European Union was busy passing landmark policy to bring crypto markets under government regulation, some lawmakers in the United Kingdom are ramping up demands for urgent action.&nbsp;



When the EU moved forward with its Markets in Crypto Assets (<a href="https://blockworks.co/tag/mica">MiCA</a>) regulation, the UK only fell further behind, putting the country at risk of missing out on innovation and jeopardizing its chance at becoming a global leader in the space. 



“With the adoption of MiCA, the EU has solidified its position as a regulatory leader for years to come,” local crypto advocacy group Crypto UK said in April.&nbsp;



Some UK leaders are trying to start the conversation around digital asset regulation with the hopes of getting bills drafted and passed within the next two years.&nbsp;



The UK’s All Party Parliamentary Group for Crypto and Digital Assets released a report Monday calling for a crypto legislative package to pass immediately. The multiparty group is chaired by Scottish National Party member Lisa Cameron. 



Monday’s report sets a deadline of 2025 for crypto regulation in the UK and advocates for a “crypto tsar,” who will be responsible for coordinating efforts across regulatory groups.&nbsp;



The Scottish National Party has historically been on the forefront of crypto asset regulation advocacy, <a href="https://www.buzzfeed.com/jamieross/scotpounds#.roN74ooBZ">first suggesting</a> a type of central bank digital currency in 2015. Cameron herself is a self-titled crypto advocate, she said earlier this <a href="https://cointelegraph.com/news/british-mp-lisa-cameron-is-not-invested-personally-in-crypto-but-advocates-for-regulation">month</a>, and has been more urgently trying to get policy through since the 2022 crypto market crash.



The crypto and digital asset parliamentary group was established in January 2022 with the mission to support innovation while protecting consumers, CryptoUK <a href="https://cryptouk.io/appg/">said</a>.&nbsp;



Cameron and her fellow group members are not the only UK regulators considering crypto policy.&nbsp;



In an April <a href="https://www.fca.org.uk/news/speeches/regulation-digital-assets-uk">speech</a>, Financial Conduct Authority executive director of markets Sarah Pritchard noted that even the recent chaos in crypto markets has not stopped investors from engaging with the asset class, so lawmakers need to act swiftly.&nbsp;



“Despite the recent crypto winter, where massive losses were sustained, the take up of crypto is on the rise year-on-year,” Pritchard said. “With more consumers and investors piling in, the risks also grow exponentially in our interconnected systems. That is why things have to change.”



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UK Considers ‘Crypto Tsar’ to Head Up Regulation

Jon Rice

Gary Gensler is the chair of the SEC, and he is not a popular man. While rumor has it that he seeks Janet Yellen’s Treasury role at some point, sources on Capitol Hill suggest that he has absolutely no chance — because he’s not just unpopular with cryptocurrency enthusiasts, but with most of the US government too.



Popularity isn’t a prerequisite for the office he’s currently occupying. Competence, however, is.



And <a href="https://blockworks.co/tag/gary-gensler">Gary Gensler</a>’s competence is notable only for its continuing absence.



The SEC under Gensler has become a weapon for government Luddites who fear the hegemony of the US dollar is under threat.



Yet it is precisely this weaponization of the <a href="https://blockworks.co/tag/sec">SEC</a> that is threatening the future of the US as an economic power.&nbsp;



Digital assets are inevitable, and in the technological revolution that financial markets will eventually have to embrace, America has two choices: Lead, or follow.



Gensler’s SEC has chosen to ignore progress, to stifle innovation, and to drive our best and brightest offshore. Thanks to Gensler, the United States is throwing the leadership of tomorrow’s financial markets to more progressive and thoughtful regimes abroad — in Europe, in the Middle East, and even in countries that the US considers hostile powers.



And it’s not just entrepreneurs and the national interest that are suffering.



In today’s <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">action against Binance</a>, Gensler once again proves that investor protection — one of the pillars of the SEC’s mission — is at the bottom of his list of priorities.



Read more: <a href="https://blockworks.co/news/sec-allegations-against-binance">The SEC Allegations Against Binance: How Bad Is It?</a>



Millions of Americans hold cryptocurrencies. Millions of Americans likely hold the tokens that he <a href="https://blockworks.co/news/sec-10-tokens-securities">unilaterally declared</a> to be securities today. Those Americans are harmed, repeatedly, by the SEC’s refusal to enter into good faith discussions about what is, and is not, a security.



As <a href="https://blockworks.co/news/markets-red-after-sec-binance">markets slide on Gensler’s actions</a> once more, we are served a timely reminder that the laws he believes govern cryptocurrencies were passed over 90 years ago. In fact, rather than engage meaningfully with token issuers, Gensler spends his time creating soporific videos like <a href="https://www.sec.gov/news/sec-videos/securities-act-1933">this</a> to defend his belief that all digital assets are securities, which is a nonsense few apart from Gensler himself seem to believe.



It’s an oft-cited fact that Gensler is an unelected bureaucrat, and there is a certain laziness in that characterization. It’s easy to blame things you don’t like on people with whom you disagree.



But Gensler is well aware that <a href="https://blockworks.co/news/crypto-lawmakers-securities-bill">bipartisan opposition</a> to his agenda is at an all-time high. Congress should be making rules that <a href="https://blockworks.co/news/house-republicans-referee-cftc-sec">define participation in our capital markets</a>, not bureaucrats, no matter how lofty their office. And Congress is expressing a deep and urgent desire to do exactly that.



For Gensler to continue on his current path is nothing less than a dereliction of the duty even unelected bureaucrats have to our democratic norms.&nbsp;



The financial markets of the future will be tokenized. They will use blockchain technology. They will consist of new and unique entities, some of which will have decentralized elements that don’t fit neatly into existing securities laws.



But one government agency has taken it upon themselves to block this progress. To ensure that America is not a leader in the development of the future global financial system, but an unwilling and reluctant participant… if a participant at all.



Gary Gensler is damaging American innovation, American investors, and American interests.



It’s time for him to go.



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Gary Gensler Is a National Disgrace: It’s Time to Rein Him In

The Reserve Bank of Australia has published its submission into an inquiry for a digital assets <a href="https://parlinfo.aph.gov.au/parlInfo/download/legislation/bills/s1376_first-senate/toc_pdf/23S1220.pdf;fileType=application%2Fpdf">bill</a>, which seeks to regulate crypto exchanges, custody services and the issuing of stablecoins.



Lodged in late May, the central bank’s <a href="https://www.rba.gov.au/publications/submissions/payments-system/pdf/digital-assets-bill-senate-economics-legislation-committee-may-2023.pdf">submission</a> focused heavily on stablecoins. The RBA sees the potential in the new form of currency while recognizing they need a strong regulatory framework.



“Stablecoin activity in Australia has been relatively limited to date, although there is potential for stablecoins to play a more prominent role in the financial system in the future,” the bank wrote.&nbsp;



“The RBA supports the development of regulatory arrangements for stablecoins that support innovation while providing appropriate safeguards and protections for investors and users.”



Even though the RBA said <a href="https://blockworks.co/tag/stablecoins">stablecoin</a> activity is limited right now, it mentioned that across jurisdictions — not just in <a href="https://blockworks.co/tag/australia">Australia</a> — governments are considering regulation based on the possibility that stablecoins could “become widely used for payments.”



The RBA also commented on central bank digital currencies (<a href="https://blockworks.co/tag/cbdc">CBDCs</a>), making clear that no decision has been made on implementation of a digital Australian dollar. It is however “actively engaging” in research on CBDCs. 



Some of that research led the central bank to another potential use case. The RBA pointed out that most of the nations that have issued CBDCs (overwhelmingly Caribbean countries) use them to “improve the efficiency” of their domestic payment systems.&nbsp;



The RBA sees a world where CBDCs could be used by people outside of the currency’s country of origin.



“It is possible that in the future, CBDCs could be issued to, or accessible by, non-residents, and potentially used outside of the issuing jurisdiction,” the central bank wrote.&nbsp;



<h2>Australian access to foreign CBDCs</h2>



The RBA also provided some insight into the bill’s proposed method of getting actionable information about how Australians would use foreign CBDCs.



This would involve collecting data from authorized deposit-taking institutions (ADIs), such as banks and credit unions.



However, if digital wallet services for CBDCs were provided by institutions other than banks or credit unions, like Big Tech, financial tech or foreign central banks, the RBA pointed out that the government wouldn’t be getting the entire picture of how foreign CBDCs are being used by its citizens.&nbsp;



The RBA was decidedly more neutral in tone than Kenya’s central bank, which said last week “<a href="https://blockworks.co/news/cbdc-kenya-central-bank">the allure of CBDCs is fading</a>” on the global stage.&nbsp;



Even though the RBA isn’t completely sold, there is no denying that advanced economies around the world are taking a strong look at the potential of a digitally issued government currency. 



Seven central banks, including the Fed, the Bank of Japan, the European Central Bank, and the Bank of England, partnered with one another <a href="https://blockworks.co/news/banks-pen-paper-cbdc-implementation">to write a paper on CBDCs</a> in late May.



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Stablecoins Could Play ‘More Prominent’ Role in Economy: Australian Central Bank

Binance claims that it is “disappointed” with the SEC’s allegations that the exchange mishandled funds, operated as an unregistered exchange and sold unregistered securities.&nbsp;



The SEC’s <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">recent lawsuit names Binance, CEO Changpeng Zhao</a>, Binance.US and BAM Trading as defendants.&nbsp;



“Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations.  But despite our efforts, with its complaint today the SEC abandoned that process and instead chose to act unilaterally and litigate.  We are disheartened by that choice,” Binance <a href="https://www.binance.com/en/blog/ecosystem/sec-complaint-aims-to-unilaterally-define-crypto-market-structure-8707489117122437402">said</a> in its statement.



Read more: <a href="https://blockworks.co/news/sec-allegations-against-binance">The SEC Allegations Against Binance: How Bad Is It?</a>



In a separate tweet, Binance.US said, “Simply put, today’s filing is unjustified by the facts, by the law, or by the Commission’s own precedent.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Today, the SEC filed civil claims against <a href="https://t.co/AZwoBOgsqS">https://t.co/AZwoBOgsqS</a> in what is the latest example of regulation by enforcement under the current Commission. To be clear, we believe the lawsuit is baseless and we intend to defend ourselves vigorously. However, we want to address…&mdash; Binance.US 🇺🇸 (@BinanceUS) <a href="https://twitter.com/BinanceUS/status/1665754230471229440?ref_src=twsrc%5Etfw">June 5, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Binance <a href="https://blockworks.co/news/sec-responds-to-coinbase-request-for-action-no">alluded to Coinbase’s ongoing legal battle with the SEC</a>, saying that the lawsuit is another example of the Commission regulating “with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology. Unilaterally labeling certain tokens and services as securities – even ones over which other U.S. authorities have asserted jurisdiction – only compounds these problems.”



<a href="https://www.coinbase.com/blog/we-asked-the-sec-for-reasonable-crypto-rules-for-americans-we-got-legal">Coinbase</a> and the SEC are currently locked in a legal battle over defining crypto regulation.



The exchange directly opposed the <a href="https://blockworks.co/news/sec-allegations-against-binance">SEC’s allegations that Binance.US commingled</a> user funds, and said that user assets are “safe and secure.”



“Through accounts owned and controlled by Zhao and Binance, billions of U.S. dollars of customer funds from both Binance Platforms were commingled in an account held by a Zhaocontrolled entity (called Merit Peak Limited), which funds were subsequently transferred to a third party apparently in connection with the purchase and sale of crypto assets,” the SEC’s lawsuit claimed.



The lawsuit also alleges that “Binance and BAM Trading, under Zhao’s leadership and control, have unlawfully offered three essential securities market functions—exchange, broker-dealer, and clearing agency—on the Binance Platforms without registering with the SEC. Acutely aware that U.S. law requires registration for these functions, Defendants nevertheless chose not to register, so they could evade the critical regulatory oversight designed to protect investors and markets.”



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