In this recap of the crypto world, we will explore the events and news that had the most significant impact in the past week of June 5. Our focus will be on the following developments:
- SEC- Binance Fiasco
- USDC Headed for Arbitrum
- SEC Sues Coinbase
- JP Morgan using Blockchain Tech
SEC- Binance Fiasco
On June 5, the SEC sued Binance, accusing the exchange of selling unregistered securities to U.S. users and operating an unregistered exchange within the United States. The lawsuit also implicated the founder, Changpeng Zhao (CZ), as a controlling figure overseeing the operation of unregistered national securities exchanges, broker-dealers, and clearing agencies by Binance and BAM Trading.
Furthermore, the SEC alleged that Binance engaged in “commingling” and “diverting” investors’ cryptocurrency and fiat funds. These claims have intensified the scrutiny of Binance’s compliance practices and raised concerns about the security of user assets.
Expressing disappointment with the SEC’s actions, Binance conveyed its active cooperation with the commission and criticized the lack of productive engagement from the SEC. The exchange also criticized the SEC for failing to provide the necessary clarity and guidance to the digital asset industry, suggesting that the commission’s true motive was to generate headlines.
In addition, Binance emphasized its readiness to defend itself vigorously against the charges and vowed to fight the lawsuit to the full extent of the law. The exchange has also warned the Binance US users to get their funds out of business before June 13.
This SEC-Binance fiasco has cast a cloud of uncertainty over the exchange’s future. With this in mind, the looming question is whether Binance can sustain business as usual and emerge as a viable entity in the long term. And while the crypto world is full of uncertainties, it is worth noting that CZ commands a staggering following, and Binance has positioned itself as the largest crypto exchange. Therefore,
there might be better ideas than underestimating them. Read more on this here.
USDC Headed for Arbitrum
Arbitrum, the Ethereum Layer 2 scaling solution, welcomes the native version of USD Coin (USDC) issued by Circle. This highly anticipated launch on June 8 provides enhanced benefits and a seamless migration process for liquidity, replacing the currently circulating bridged version of USDC on Ethereum. With this move, Arbitrum proudly joins the league of blockchain platforms supporting USDC, promising a brighter future for Ethereum.
Regarding this launch, Arbitrum highlights the numerous advantages of utilizing native USDC on its platform. One of the most notable benefits is the presence of an entire reserve, ensuring the stability and security of the stablecoin. Furthermore, native USDC guarantees a 1:1 redeemability for U.S. dollars, assuring users of a reliable value peg. This development also unlocks new possibilities for institutional on/off-ramps, facilitated not only by Circle but also by its trusted partners. Such support from established players in the industry will undoubtedly bolster confidence and foster greater adoption of USDC on Arbitrum.
On the other hand, Circle announced that businesses with Circle accounts could access Arbitrum USDC and seamlessly swap it across supported chains, bypassing the costs and delays typically associated with bridging. Notably, influential applications like Aave, Balancer, Camelot, Coinbase, Curve, and Uniswap have committed to supporting Arbitrum USDC, as per the official announcement. Read more on this here.
SEC Sues Coinbase
Continuing its regulatory crackdown on the crypto industry, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Coinbase.
The SEC’s lawsuit claims that Coinbase failed to register as a broker, national securities exchange, or clearing agency, evading the established disclosure regime designed to protect investors in securities markets. SEC Chair Gary Gensler highlighted that Coinbase’s mixing of different functions deprived investors of essential protections, including safeguards against fraud and manipulation, proper disclosure, and routine inspections by the SEC.
In response to the SEC lawsuit, Coinbase’s Chief Legal Officer, Paul Grewal, called for developing crypto-specific legislation. Grewal argued that “the SEC’s enforcement-only approach, in the absence of clear rules for the digital asset industry, harms America’s economic competitiveness and companies like Coinbase that prioritize compliance.” He emphasized the importance of legislation that transparently establishes fair rules rather than relying solely on litigation. In the meantime, Coinbase intends to continue operating its business as usual.
Brian Armstrong, CEO of Coinbase, highlighted the unique nature of the lawsuit against Coinbase, as it focuses exclusively on determining the classification of assets as securities. Armstrong expressed confidence in Coinbase’s understanding of the facts and the law, highlighting the need for more consensus within the U.S. government regarding classifying cryptocurrencies as securities. He also referenced the conflicting statements from the SEC and the Commodity Futures Trading Commission (CFTC) to explain the regulatory ambiguity further.
Armstrong expressed hope that the court proceedings would provide much-needed clarity for crypto exchanges, allowing them to comply more effectively with securities laws. He also praised Congress’s recent efforts to pass crypto legislation, seeing it as a potential solution to regulatory uncertainties. And similar to Binance, Coinbase vows to mount a robust defense against the SEC charges, displaying confidence in its position and determination to navigate the legal proceedings successfully. Read more on this here.
JP Morgan using Blockchain Tech
JP Morgan has partnered with prominent Indian banks, including ICICI Bank, IndusInd Bank, Axis Bank, HDFC Bank, Yes Bank, and a banking unit owned by JP Morgan at Gujarat International Finance Tec-City (GIFT City). Together, they are working towards developing a blockchain-based platform that facilitates interbank settlements of U.S. dollar transactions. By leveraging blockchain technology, JP Morgan and its partners aim to streamline the settlement process and remove the constraints imposed by traditional financing systems.
The existing interbank settlement system often needs more delays and limitations. Transactions can take hours to process, and settlements are unavailable on weekends and public holidays. In contrast, JP Morgan’s blockchain pilot aims to address these issues by introducing a new settlement system that operates around the clock. By leveraging blockchain technology, the platform being developed will enable banks involved in the partnership to process instant transactions 24 hours a day, seven days a week. This advancement can significantly streamline interbank settlements and improve overall efficiency.
JP Morgan plans to conduct a pilot project to evaluate the effectiveness of its blockchain-based interbank settlement system. The pilot is expected to span several months, during which participating banks will test the platform and provide feedback on their experiences. The pilot project is set to commence on Monday, June 13, utilizing JP Morgan’s blockchain platform, Onyx, following approval from the International Financial Services Center Authority.
This development has the potential to revolutionize cross-border transactions, providing banks with increased flexibility and ensuring a seamless experience for customers. Furthermore, blockchain technology offers enhanced transparency, security, and trust, bolstering the integrity of interbank settlements. Read more on this here.
