The Wild West of the Crypto World? Reasons Behind the U.S. SEC's Lawsuits

Introduction

The rise of any technological transformation typically goes through stages from inception to maturity, usually experiencing market frenzy feedback and twists and turns brought about by internal and external reasons.

The performance of blockchain technology in recent years perfectly validates this point. The market cooling that led to the bubble bursting is a crucial turning point for the industry. What followed was a series of major events, such as the withdrawal of capital and the bankruptcy scare of FTX, the world’s second-largest exchange, all of which were presented one by one as a prelude to the turning period.

Regulation of the crypto industry by countries worldwide has gradually been implemented during the bear market stage, mainly focusing on the largest cryptocurrency sectors in the crypto market, especially the regulatory actions revolving around major exchanges.

In this process, many exchanges have already withdrawn from some of their business in host countries. Although this does not mean that the local crypto users have been abandoned, it has still caused them some difficulties. For example, the “Crypto Asset Market Regulation Act” introduced by the European Union has caused significant trouble for major exchanges conducting business in Europe.

In summary, the frequent regulatory games over the past year represent the largest scale of suppression and restrictions from the government since the policy changes in mainland China. Implementing regulatory policies often comes with limitations and standards, a situation quite different from the wild expansion of the crypto market earlier on.

However, these regulatory battles also signify that the crypto industry is gradually being accepted by the mainstream. This is not necessarily a bad thing in the long run, although it often comes with growing pains and fluctuations, and can be understood as the crypto industry itself being at a turning point.

In the year-plus since 2022, crypto users have received a plethora of information from government regulation, and the chain reactions this has caused have also been reflected in the trends of various secondary crypto markets.

The recent U.S. SEC’s submissions to court of lawsuits against Binance and Coinbase are very typical events, especially the related comments by SEC Chairman Gary Gensler, which have left a deep impression.

（Image source:bolsamania.com）

Gary Gensler straightforwardly stated that exchanges like Binance suffer from problems of fictitious trading volumes and corruption. These crypto platforms exist solely to create wealth for themselves, acting as the counterparty to their users. The SEC finds it hard to trust these “Casino Operators” to protect investors’ interests, and the regulatory boundaries and business models applicable to cryptosystems are unprecedented in any other financial field. The so-called crypto world is still the Wild West.

Event Recap

Gary Gensler’s comments and views not only represent his standpoint but also symbolize the U.S. SEC’s understanding of the crypto industry.

This statement largely draws conclusions from a macro perspective on the crypto industry. Regardless of how many crypto users or entities have experienced a dramatic increase in wealth in this domain over the past decade or so, the actual operation of crypto finance descending from capital management indeed shows characteristics of roughness and blindness in many aspects.

This is inconsistent with the philosophy pursued by the U.S. traditional financial regulatory system that the SEC represents. Due to the characteristics of blockchain technology, regulating the crypto market has always been challenging. Moreover, the circulation of cryptocurrencies shares commonalities with traditional financial derivatives like stocks, securities, and bonds.

However, the support of decentralized technology has made the definition of cryptocurrencies unclear, with the categorization of major exchanges dealing in secondary markets also remaining vague. Until the mainstream financial system provides clear positioning and classification for the crypto market, it’s challenging to set the tone based on previous financial product types.

This provides room for maneuvering in the regulation by relevant public authorities, and since its formation, the crypto market has also been fraught with incidents. Profits and losses at times are not entirely determined by the market, and centralized exchanges naturally have corresponding issues and risks.

Therefore, regulation targeting them stems from governmental administrative measures and scrutiny from the financial regulatory system.

However, since regulations related to the exchanges themselves are not yet perfected, the U.S. SEC this time has chosen litigation to advance this process. In the United States, once a court adjudicates a lawsuit, subsequent related incidents will have a reference.

This incident began to unfold on June 5, 2023, when the U.S. Securities and Exchange Commission (SEC) filed lawsuits against Binance, the world’s largest crypto asset exchange, and Coinbase, the largest crypto asset exchange in the U.S.

（Image source:reuters.com）

Although the litigation involves many different categories of cryptocurrencies, and the SEC’s allegations against the two companies, Coinbase and Binance, are not the same in many respects, the essential intent of the SEC is clear. They have explicitly stated that the businesses operated by Coinbase and Binance belong to the securities market and should fall under SEC regulation.

The SEC’s lawsuit against leading exchanges has brought risks to the development of the U.S. crypto industry. As core exchanges in the industry, facing litigation from the SEC could likely affect the operation of the platforms themselves and the related cryptocurrencies.

However, the SEC’s actions against crypto exchanges have been prepared for a long time.

Since the prolonged lawsuit between the SEC and Ripple Labs continued into April, SEC Chairman Gary Gensler began to make statements about cryptocurrencies and securities being the same product, asserting that the crypto market was not incompatible with U.S. securities laws.

Within the SEC, an internal resolution on Coinbase’s insider trading case had already been reached, and preparations for the related litigation had begun.

Cryptocurrency industry groups have rebutted the SEC’s statements and actions. Gary Gensler’s aggressive stance and the SEC’s actions against the crypto industry have been frequent under his leadership. These actions include events like the arrest of FTX’s former CEO SBF, allegations of fraud against Justin Sun, and the SEC’s ongoing expansion of its crypto enforcement team, including regulation plans for DeFi-related Dex and various platforms.

Gary Gensler himself is quite controversial, not only opposed by the crypto industry but also at odds with many within the U.S. government, even facing the risk of being dismissed.

The climax of this storm could be the legal battles between Binance and Coinbase against the SEC, including allegations against Bittrex for failing to register as a trading platform in April, requests for Do Kwon’s case files, and a series of operations linking the bankruptcy of Silicon Valley and Signature Bank to cryptocurrencies. These can be seen in Gary Gensler’s recent attacks on the crypto industry.

In his two years at the SEC, Gensler has initiated over 20,000 lawsuits. He is a highly controversial figure. However, his actions against the crypto industry are not absolute. Though he considers cryptocurrencies as securities to be regulated by the SEC, his statements regarding BTC, ETH, and other stablecoins have been relatively vague, not defining them explicitly as before.

But the SEC’s actions against the crypto industry have some unreasonable aspects. Many industry insiders see the maximization of jurisdiction as an attempt at malicious regulation. It can be understood as the SEC vying for long-term regulatory control over cryptocurrencies. The core demand is that cryptocurrencies are securities, and platforms trading them must register with the SEC.

Moreover, crypto companies targeted by the SEC are often fined millions or even higher amounts, along with corresponding business rectification regulations. Many crypto industry insiders generally believe that the SEC is unwilling to accept blockchain technology in cryptocurrencies and is merely following the old path of securities regulation.

Even in May, the SEC directly deleted the official definition of digital assets within hedge fund rules, further exhibiting arrogance.

In this tide, the SEC’s actions seem more out of its organizational will, not from the federal government or Supreme Court, so the controversy and doubts arising from this are enormous.

Top industry capital like a16z and the Blockchain Association have doubts about the SEC’s cryptocurrency custody rules. More industry people have also voiced opposition individually.

Being on the SEC’s hunting list, leading exchanges Binance and Coinbase have not been spared. Under a combined attack, Coinbase has counterattacked by requesting the SEC to issue clear crypto regulations and has filed a lawsuit with the federal court.

In this closely-knit and chaotic confrontation, some crypto companies have bowed to the SEC’s pressure, submitting various registrations and applications, but more voices in the crypto industry are questioning.

The SEC is supported by the Democratic Party in the U.S., while Republicans are more opposed or neutral. The turmoil in the crypto field also involves political factors, adding to the chaotic situation.

Regarding Coinbase’s lawsuit, the SEC directly responded that Coinbase had no right to demand government agencies fulfill certain duties, asking the court to dismiss its petition, and further proposing additional regulation and guidance for the crypto industry.

At the same time, the U.S. CFTC also commented on the SEC’s regulatory actions against the crypto industry, expressing a definite need for regulation. However, compared to the SEC’s drastic measures, the CFTC’s statements and actions are relatively milder, and many crypto industry insiders consider the CFTC to be more friendly.

The CFTC and the SEC have been frequent characters in regulating the U.S. crypto market in recent years, with the SEC’s methods becoming more aggressive and frequent. The idea of jointly regulating the crypto market has been circulating within the U.S. government.

After June, following the Coinbase case, the SEC officially sued Binance and its CEO, Changpeng Zhao, for violating U.S. securities trading rules on June 5, with as many as 13 charges. A previously calm Binance had no choice but to respond.

As Coinbase responded to the SEC’s charges in court, clear legislation is the solution to the current disputes. The SEC has classified various cryptocurrencies as securities and has taken extensive legal action against exchanges.

After months of preparation and fermentation, the SEC has taken at least 17 public crypto-related enforcement actions since FTX’s bankruptcy six months ago. The scale and intensity have increased significantly, and actions against Binance and Coinbase have raised the impact and scale to a considerable level.

Though many tend to believe that the SEC’s frequent enforcement actions cover its inaction in the FTX incident, in these cases, as many as 67 mainstream currencies have been defined as securities by the SEC, which has further sought to freeze Binance and Coinbase’s assets.

In summary, since the SEC began its enforcement actions, it has caused a significant blow to the entire crypto market, with over $4 billion in assets fleeing the two major exchanges. In 2022 alone, the SEC obtained about $14 billion in funds from its enforcement actions.

The SEC’s lawsuit against Coinbase continues specific cases from last year to now. At the same time, charges against Binance itself, Binance.US, and its CEO, Changpeng Zhao, involve significant financial issues and criminal cases, making the situation even more severe.

Reasons for the Lawsuit

The above text mentioned the SEC’s definition of cryptocurrencies and the attribution issue. This aspect of law enforcement primarily demonstrates the SEC’s attempt to achieve long-term regulation over the crypto industry.

In the case involving Coinbase, there are no allegations of criminal activity. Instead, the focus is on whether cryptocurrencies are considered securities, and whether the platform needs to be registered with the SEC and subjected to long-term regulatory scrutiny.

The accusations against Coinbase and Binance concentrate on the same issue of staking. However, unlike Binance, Coinbase has not faced more stringent law enforcement actions.

The clash between the two also focuses on the definition of cryptocurrencies, and the SEC’s negotiation with Coinbase over petitions for specific crypto rules since last year. The SEC does not have legislative power, so even if both sides have valid points, a court decision is still required.

What complicates matters is that over 80% of Coinbase’s business comes from the U.S. market, so any dispute with the SEC could cause significant market disruption.

The SEC’s most severe charge against Coinbase is its conduct in the staking business. Since it employed unregistered cryptocurrencies as securities, the revenue generated should be considered illegal gains. Therefore, the SEC demands that Coinbase return all illegal profits plus prepaid interest and pay a civil fine.

In the case against Binance, the SEC accuses it of improper handling of customer funds and fraudulent operations, and has also filed a lawsuit for failing to register securities. It alleges that Binance has been mixing billions of dollars of customer funds and secretly transferring over 200 million dollars to an independent company account controlled by CEO Zhao Changpeng. Moreover, the platform’s system for detection and trade manipulation contains traps that mislead customers.

Binance has long sought to evade U.S. regulation by setting up BAM Management & Trading Company and raised approximately 200 million dollars from BAM Management’s private investors. Binance’s market maker, Sigma Chain, also owned by CEO Zhao Changpeng, is operated by several Binance executives, raising suspicions of trade manipulation.

Though Binance, the world’s largest cryptocurrency exchange, has been embroiled in negative news over the past few years, the ongoing joke in the crypto community that its CEO Zhao Changpeng is targeted by the FBI almost every day of the year is well-known.

Because crypto exchanges are in a regulatory gray area, especially in the U.S. where related legislation has not yet been implemented, and given the decentralized nature of blockchain technology, issues with internal operations and fund transfers are inevitable, and regulation remains challenging.

Considering that Binance’s market is not limited to the U.S., this makes the convergence and flow of different funds more complex.

The collapse of FTX is still fresh in memory, so the legal battle Binance now faces has sparked some market panic.

But since its inception, Binance has avoided fatal blunders like FTX. The market’s confidence in the platform is well-known, and in such an environment, the SEC’s disputes with several crypto companies may not lead to the claimed victory.

The impact of the SEC’s enforcement actions on the crypto market is evident. Last month, the SEC classified over 120 billion dollars of cryptocurrencies as unregistered securities, affecting nearly every aspect of the crypto industry.

After the lawsuit against Binance was filed, major cryptocurrencies fell sharply in response. The SEC’s portrayal of crypto platforms profiting at the expense of users, undermining trust in their ability to protect investors’ interests, hit a sore spot with centralized exchanges.

Following this, the trading volume on various Dex platforms surged by over 80%, reflecting the market’s panic.

Coinbase and Binance’s response to the SEC’s lawsuit has been very resolute, indicating a determination to fight.

This attitude reflects the crypto industry’s brash view of the SEC’s enforcement and confirms the popular belief in the phrase, “What’s not forbidden is allowed.” Without clear legislation or precedent, the SEC’s claim that cryptocurrencies are equivalent to securities lacks legal support and is more of a unilateral statement.

As for the accusations against Binance and Zhao Changpeng, more evidence is needed, and the U.S. Federal Court will have to decide. The content of the lawsuit only represents preliminary charges.

Ultimately, the SEC is a regulatory agency, not a judicial one, which is the underlying logic for the controversies arising from its actions in the crypto industry.

However, when discussing regulation, it’s essential also to mention the CFTC, often cited alongside the SEC, as it provides a necessary context for understanding.

SEC vs. CFTC

The unique aspect of U.S. financial regulation lies in its differentiation between securities and commodities, which are overseen by separate institutions. Prior to this lawsuit, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) had long been at odds over the regulatory jurisdiction of cryptocurrencies. The SEC contends that most cryptocurrencies should be classified as securities, while the CFTC believes many cryptocurrencies, aside from Bitcoin, should be regarded as commodities.

As the traditional securities regulatory body in the U.S., the SEC has the authority to supervise platforms in the securities sector as well as the securities themselves, which includes investment contracts among other items.

Legally speaking, fiat currency isn’t a security. However, if a digital asset takes the form of a note, an investment contract, or other securities, it will come under the SEC’s purview and be subject to relevant securities laws.

This stance serves as one of the primary justifications for the SEC’s enforcement actions in the crypto industry.

In 2018, then SEC Chairman Jay Clayton particularly emphasized that for crypto assets, the SEC would focus more on the nature of the transactions rather than whether the items sold constituted investment contracts.

This perspective has stayed the same in recent years. The current SEC Chairman, Gary Gensler, has urged lawmakers to grant the SEC broader authority over cryptocurrencies to bolster investor protections, even though he had expressed opposing views and comments before he was appointed chairman.

Under this directive, starting in 2020, the SEC initiated investigations and enforcement actions against crypto companies like Ripple Labs Inc., BlockFi Lending LLC, Celsius Network LLC, Gemini Trust, and Voyager Digital.

Various events surrounding the lawsuits of Coinbase and Binance essentially reflect the SEC’s enforcement actions, especially after FTX’s bankruptcy, which significantly accelerated the process.

The primary role and responsibility of the CFTC is to oversee U.S. commodity futures, options, and financial futures and options markets. Compared to the SEC, its regulatory scope is narrower, and its power to combat fraud and manipulation in the commodities market is more limited.

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The CFTC began to focus on the crypto market relatively early, publishing its first official statement regarding the jurisdiction over digital assets in 2015. Since then, it has consistently strengthened and expanded its stance, asserting that BTC, ETH, and other virtual currencies are encompassed in the definition of commodities and are thus subject to the terms of the Commodity Exchange Act and CFTC regulations.

This stance became evident when, amidst recent comments by the SEC about the definition of cryptocurrencies, the CFTC firmly stated that cryptocurrencies like ETH should be classified as commodities rather than securities.

Moreover, the CFTC’s position is bolstered by past legal cases. In a 2021 New York case, the court ruled that BTC, ETH, LTC, Tether tokens, and other digital assets fall under the broad definition of commodities.

The CFTC has initiated several crypto-related enforcement actions, though their approach has been comparatively moderate, especially regarding exchanges offering crypto derivatives to Americans without registering with the CFTC.

While the CFTC asserts that cryptocurrencies are commodities, its jurisdiction over the crypto market is limited to regulating interstate trade for fraud and manipulation. The CFTC typically doesn’t oversee crypto transactions that don’t involve margin, leverage, or financing, nor can they require cryptocurrency exchanges to register with them.

Consequently, the CFTC’s regulatory scope is noticeably narrower than the SEC’s. The CFTC has refrained from intervening beyond the definition of cryptocurrencies, and by treating them under commodity-related laws, the US crypto industry might find this regulatory approach more accommodating. However, there’s a downside: the lack of registration oversight for crypto companies, a focal point of the SEC’s advocacy.

Even if cryptocurrencies are classified as commodities by the CFTC and regulated under commodity statutes, the financial categories involved in their circulation and trading are beyond the CFTC’s effective purview. This is because they’re primarily concerned with the commodity attributes of cryptocurrencies and find it challenging to effectively oversee exchange platforms.

The SEC’s approach, however, seems more heavy-handed. Since its inception, cryptocurrency has been in a regulatory gray zone, and debates over its precise definition persist. Hurriedly classifying cryptocurrencies as securities neglect their unique nature, considering most financial regulations predate cryptocurrency’s emergence. The earliest BTC inherently carried a counter-mainstream quality.

As former SEC Chairman Jay Clayton recently commented, the definition of securities is “intentionally broad and flexible.”

The SEC uses the Howey Test as a primary benchmark to determine if a financial asset meets the criteria of an investment contract and, therefore, qualifies as a security. Beyond this, the SEC has provided scant public guidance.

This lack of clarity prompted Coinbase to petition the court last year for clear regulatory guidelines from the SEC. Ironically, the SEC has repeatedly sought to have these petitions dismissed. Amidst this tug-of-war, the SEC also submitted results from the Howey Test for litigation, claiming that many cryptocurrencies traded on the Binance and Coinbase platforms, including SOL, ADA, MATIC, BNB, and BUSD, are securities.

This move naturally triggered rebuttals from companies affiliated with the implicated cryptocurrencies, such as Solana and Polygon. Still, these objections didn’t deter the SEC’s enforcement actions.

The SEC’s blunt approach is evident in its struggle with the inherently decentralized nature of blockchain technology, which complicates the applicability of the Howey Test. While a cryptocurrency might have backing from a developer team initially, its influence typically wanes over time.

Once a cryptocurrency achieves full decentralization through its blockchain network, its classification as security becomes ambiguous since it no longer has a centralized entity. This is one reason the SEC has targeted leading exchanges like Coinbase and Binance, which act more as centralized platforms for cryptocurrency custody and trading.

Ultimately, the inherently decentralized nature of cryptocurrencies poses challenges and conflicts for securities management. Traditionally, security issuers should regularly disclose information to investors. However, when dealing with decentralized cryptocurrencies managed by software protocols, it remains unclear who should make these disclosures. Furthermore, users on blockchain networks are encrypted, making regulations requiring issuers to possess security documents for assets stored on blockchains somewhat redundant.

Even if exchanges fall under the SEC’s jurisdiction, the inherent peer-to-peer nature of cryptocurrencies means a significant amount of off-exchange trading would remain unregulated, making their classification as securities seem far-fetched.

Essentially, both the SEC and the CFTC seek to regulate the crypto industry within their respective jurisdictions under existing legal frameworks. Due to ambiguous U.S. laws, they seem to be competing entities. The SEC leans towards registration jurisdiction, while the CFTC emphasizes enforcement. Although they have different focuses, both agree on the need for regulation.

The reality is that the crypto industry inherently has difficulties with regulation, leading to ongoing disputes. A closer examination of the reasons the SEC presented in its lawsuits against Binance and Coinbase can elucidate the underlying issues.

The SEC believes that Binance and Coinbase simultaneously act as exchanges, brokers, and clearing agencies, roles which are typically distinct in traditional finance to prevent conflicts of interest. Although the crypto industry has its own take on this issue, advocating for the rapid circulation and real-time settlement of crypto assets, this unconventional financial system still fails to gain SEC’s endorsement.

While the SEC has commended and acknowledged blockchain startup Prometheum, allowing it to utilize this hybrid role system, subsequent reports revealed potential personnel and interest-related interactions between the two entities. It seems that the SEC might be attempting to nurture an alternative through enforcement actions.

However, when suing Binance, the SEC presented a case highlighting significant flaws in the cryptocurrency business model. This is about Binance’s affiliation with Sigma Chain, where allegedly inflated transactions were used to exaggerate the platform’s trading volume, thereby misleading and directing investors.

SEC Chairman Gary Gensler has publicly stated that cryptocurrency intermediaries might need to separate these business lines to comply with securities laws.

For centralized exchanges, their only sustainable profit method is a composite system. If this approach is deemed illegal, the fundamental framework of centralized exchanges would collapse, leading to existential challenges.

In the case against Coinbase, the SEC’s stance is even more decisive. The SEC argues that even if the quantity of cryptocurrencies remains unknown, they still fall under regulated securities. Hence, even if there’s no legal statute declaring cryptocurrencies as illegal, platforms engaged in cryptocurrency trading are still illicit if they haven’t registered with the SEC. In reality, Coinbase had previously sought registration pathways with the SEC, but many of the current stipulations are incompatible with the nature of the technology. This made seeking SEC registration exceedingly costly and time-consuming, leading Coinbase to abandon the pursuit eventually.

Before and after the SEC initiated lawsuits against Coinbase and Binance, several crypto companies attempted to register with the SEC. However, there are yet no successful examples to date.

Involvement of External Forces

The enforcement actions taken by the SEC have caused significant turmoil in the entire cryptocurrency industry. Not only does this concern the very definition of cryptocurrencies, but the decentralized finance (DeFi) sector has also been implicated, with the SEC suggesting that DeFi may fall under fraudulent activities.

As the event escalated, many external forces began to intervene.

Coinbase’s petition regarding cryptocurrency regulations has been questioned multiple times by the U.S. Federal Court. However, these inquiries have been consistently rebuffed by the SEC.

Numerous government officials who support the crypto industry have started to voice their discontent with the Democratic administration and SEC Chairman Gary Gensler. Calls for Gensler’s removal have emerged, and he has been the focal point of a growing number of criticisms from the blockchain community.

During the litigation process with Binance, both parties seemed to find some middle ground. Binance has committed to returning all U.S. customer funds and wallet keys in response to the SEC’s prior allegations about the mishandling of mixed assets.

Furthermore, in the prolonged litigation between the SEC and Ripple Labs, the release of the Hinman documents revealed flaws in the SEC’s enforcement approach. The SEC’s primary focus appears to be on expanding its jurisdiction rather than protecting investors, a realization that has shifted public opinion more favorably towards the crypto industry.

BlackRock’s ETF approval history with the SEC has also been disclosed. Historically, the SEC has approved 575 ETFs proposed by BlackRock. These assets are mainly composed of BTC held by the iShares Bitcoin Trust and are custodied by Coinbase.

BlackRock also submitted a proposal to the SEC regarding the iShares Bitcoin Trust, proposing a supervision-sharing agreement with NASDAQ and BTC spot trading platform operators. This would allow the sharing of information about market trading, clearing activities, and customer identities, aiming to reduce the potential for market manipulation.

This proposal offers a slight chance for a resolution to the SEC’s stalemate. However, it seems to be a long-term process. Companies like VanEck are already adjusting their ETFs with BTC spot assets. Similarly, Ark Invest has resubmitted its BTC spot application to the SEC, choosing Coinbase for market oversight to alleviate pressures from the SEC. Numerous other crypto firms are following suit.

The U.S. House of Representatives held two oversight hearings concerning the SEC on June 22nd. The scale of this disturbance has surpassed the jurisdiction of the federal courts and is now delving into the very enforcement authority of the SEC.

Another lawsuit between the SEC and Terraform Labs is nearing its decision phase, and skepticism towards the SEC is growing within the U.S. community.

A significant turning point has been the unity within the crypto industry. Many fear that if the SEC continues its current regulatory trajectory, it could deal a devastating blow to the entire sector.

The U.S. government’s investigation into Gary Gensler is ongoing. Due to the aggressive stance he has taken against the crypto industry, not all factions within the U.S. government and other regulatory bodies are in agreement. This has resulted in a stalemate.

Rumors have emerged regarding Gensler’s potential resignation. Although the SEC has denied these claims, it signifies the backlash to his aggressive enforcement strategy.

Among various narratives, a conspiracy theory suggests that the SEC’s enforcement actions are paving the way for a state-led Central Bank Digital Currency (CBDC) in the U.S. This theory posits that it might be simpler to introduce a mainstream cryptocurrency that is more legally favorable for regulatory demands, given the challenges of regulating the current crypto market.

However, this theory is rather fringe and not widely accepted. Many in the crypto sector are urging the U.S. government to consider the regulatory frameworks of the EU and Japan to prevent aggressive enforcement actions like those of the SEC. As of now, these calls remain unanswered.

Event Follow-up and Development

So far, the SEC’s series of lawsuits are ongoing, but a turning point in the events has emerged. In the case of Binance, both parties have reached some agreements. The matter of repatriating mixed funds to the United States has been resolved. As long as Binance can properly execute the agreement, many more critical allegations will no longer exist.

The Coinbase case is still mired in disputes over a petition concerning cryptocurrency regulation rules. The issue has evolved to a point where it no longer solely revolves around the legality of the exchange itself.

Regarding ETF-related cases, Grayscale is in another lawsuit with the SEC. If the ETF-related issues can set a precedent, it will be a breakthrough event for both the SEC and the cryptocurrency industry, largely determining whether the SEC’s claims are valid.

The conflict between the cryptocurrency industry as a whole and the SEC is escalating into a full-fledged war. Binance’s deadline for defense is set for September, while Coinbase continues to ask the court to compel the SEC to respond to a previous petition.

Given the current situation, it’s foreseeable that this series of enforcement actions led by the SEC may become a pivotal transformation point for the entire cryptocurrency industry, amplifying calls for cryptocurrency legislation.

Moreover, the SEC’s series of enforcement actions have been increasingly questioned by relevant stakeholders. For the US federal courts, public opinion is an important factor that can’t be overlooked.

As for subsequent developments, considering the lengthy litigation process in the United States, some waiting is required. However, within a month, the entire crypto market has been gradually emerging from the shadow of the SEC incident, with prices of major cryptocurrencies gradually recovering after an initial sharp decline.

Conclusion

Often, a pivotal moment in significant technological revolutions arises when derivative fields begin to explore a balance between individual and societal benefits.

The series of recent lawsuits by the SEC reveal the serious questions posed by U.S. authorities about the crypto industry. Different countries have responded to the crypto sector with varying degrees of regulation, either embracing a full ban or complete acceptance. These contrasting policies can greatly impact the industry, especially during its pivotal moments.

However, for the industry to be truly embraced and recognized by the mainstream, the advent of regulation is inevitable. The speculative bubble brought about by blockchain technology might have burst. The entire sector should now contemplate how to shift its focus from short-term gains to long-term sustainable growth.

Only when financial capital successfully transforms into productive capital might the crypto industry usher in its true “golden age.”