The U.S.
Securities and Exchange Commission (SEC) is suing the most powerful crypto
exchange Binance and Coinbase after a month of threats and warnings. The exchanges
are charged with serious offences like “placing investors’ assets at
significant risk”, fraud with investors’ funds - which were send to a separate
company that is controlled by Binance founder Changpeng CZ Zhao - lying to the
regulator, and insufficient efforts to limit the access of U.S. citizens to the
exchange.
Coinbase
has been accused of operating as an unregistered broker, exchange and clearing
agency. “There's a business model that bundles and commingles functions that we
don't see, nor would we allow elsewhere, in finance,” SEC Chair, Gary Gensler,
said to Bloomberg. Staking also came into the SEC’s focus, as it is suing
Coinbase over its staking services. The accusations against Coinbase may seem absurd
as the exchange has received multiple licenses to operate in the United States,
and was trying to cooperate with the SEC to establish the best practices to put
in place to regulate the sector for years. So, if such a transparent company is
haunted by the SEC, others will certainly have no protection.
The crypto
market capitalisation has deteriorated on the news. BTC prices slid below
$26,000 per coin, but mostly recovered the day after. However, the forecast
remains negative as prices may go further down to $24,000 per coin, and even
lower to $20,000.
Significant
capital inflows into U.S. assets were spotted amid hyping AI stories. But, the
recovery of the stock market could be attributed to the profit taking of
short-sellers. No assets can climb or fall forever. There are no fundamentals
behind the recent mini-rally in U.S. stocks, but the is also no alternative to
them, as stocks of the Old World and China seem to be rather disappointing as the
economies in these countries are dramatically slowing down. The American
economy, in contrary, is looking strong. Persistent high inflation is likely to
result in higher-for-longer interest rates, meaning that risky assets will
remain under pressure. The rebound of the crypto market could be seen only at
the end of 2023 or the beginning of 2024.