The future of cryptocurrencies depends on the outcome of the US Securities and Exchange Commission (SEC) litigation against the Binance and Coinbase exchanges. This opinion was expressed in an interview with CNBC by the former chairman CFTC Timothy Massad.
In early June, the SEC sued Binance and its CEO Changpeng Zhao. The Commission charged the defendants with unregistered activities, illegal offering of securities to investors, and mixing client and corporate assets.
Following the regulator filed a lawsuit against Coinbase. The SEC claims relate to the company’s consolidation of the functions of a broker, exchange and clearing agency, a staking program, and other violations of securities laws.
According to Massada, one of the main problems of the cryptocurrency market is fictitious trading (wash trading). He estimated the share of such manipulations at 50-90% of trading volumes on crypto platforms.
Massad noted that such exchanges conduct their own trading activities, which should not be. However, there are no procedures in place to prevent illegal practices.
“The business model of these exchanges is incompatible with how our securities markets operate,” he stressed.
The former head of the CFTC believes that the authorities and the SEC should create industry rules to protect investors, prevent fraud and manipulation. It is also necessary to answer the main question whether cryptocurrencies are securities, he added.
“The question is how do we create a regulatory framework where there is room for innovation that may lead to really valuable things, but also protect investors at the same time,” Massad said.
Recall that in March, the CFTC filed a lawsuit against Binance. The current head of the department, Rostin Benham, believes that the Commission needs additional powers to regulate the crypto industry.
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