The United States Doesn’t Require “Additional Virtual Currency” as It Already Possesses the Dollar, According to Gensler of the SEC
The US no longer needs digital currency, Securities and Exchange Commission chief Gary Gensler said as his agency sued Binance and Coinbase for operating unregistered securities exchanges.
In an interview with CNBC on Tuesday, Gensler dismissed claims that his approach muddies the legal landscape surrounding cryptocurrencies, also pointing out that there are parallels between his case against Binance CEO Changpeng “CZ” Zhao and the criminal case against FTX founder is Sam Bankman-Fried.
“We don’t need more digital currency…we already have a digital currency, it’s called the US dollar,” Gensler said. “We haven’t seen over the centuries that economies and the public need more than one way to move value.”
The SEC sued Binance Monday and Coinbase Tuesday for allegedly using services like brokerage and clearing for had offered regulated securities.
Gensler will attempt to prove that the thousands of tokens tradable on two of the largest crypto venues resemble investment contracts that should have been registered with his agency, and not mere means of payment. “All we have to prove is that one of them is a security and they should be properly registered,” he said.
“There has been clarity for years” about the nature of securities law, Gensler added, dismissing concerns that crypto firms face uncertain enforcement. “These intermediaries must comply with regulations.”
Gensler said that Binance subsidiary Sigma Chain “increased volumes and falsified numbers due to a lack of controls,” adding that the public “can draw parallels to the Bankman-Fried’s case, who is currently in this situation.” He is awaiting trial for fraud, of which he has pleaded not guilty.
Gensler doubled down on those comments in a Bloomberg TV interview later Tuesday.
“There are parallels here to the FTX scam manipulations that we saw and [what the U.S. has alleged] against Sam Bankman-Fried where he had a sister organization, Alameda, and the special arrangements with that trading platform FTX,” Gensler told FTX Bloomberg TV.
He added: “You see one platform after the other [where] . The entrepreneurs behind the platform[s] also seek to build fortunes for themselves and their investors through sister organizations, hedge funds, trading against the clients or [whether] even when it comes to… acting against their clients.”
Gensler pointed out pointed out that the crypto industry needs to improve its compliance and disclosures “if it wants to be successful in the future”.
“Without that, this whole area risks collapsing like a house of cards,” Gensler said on Bloomberg TV.
The SEC’s lawsuit does not allege fraud, but seeks civil penalties and a permanent ban on Zhao from serving as an officer or director of a securities issuer.
Additional reporting by Eliza Gkritsi and Sandali Handagama.
UPDATE (June 6, 16:21 UTC): Comments added by Gensler on Bloomberg TV.
