Mar 6, 2023

A U.S. Securities and Exchange official said agency staff believes Binance.US is operating an unregistered securities exchange in the U.S., and that staff believe the sale of VGX tokens by Voyager Digital violated federal securities laws.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. Well, jumping to another part of Asia, the Wall Street Journal is out with a new report on Binance. Joining us now to discuss the story is Coindesk Global policy and regulation, managing editor Nick Day, who was also the editor of Coin de State of crypto newsletter. Good morning, Nick. How are you? Hey, good morning. So this uh Wall Street Journal report says that oh, Binance and Binance us uh contrary to popular belief, uh may have, may have and I'm saying may because I haven't seen the text myself but may have had uh relationships that were a lot closer than uh people have led on. Uh Can you can you, you know, elaborate a little bit on what this means? Of course, for things like the acquisition of Voyager. Yeah. So obviously, um you know, this idea that Binance us has much greater control of, oh, sorry, Binance Global has much greater control of finance us than the, you know, it company is willing to admit is probably not great for how Binance and Binance us will be perceived by US regulators. Um, you know, on Friday sec, uh, Attorney William Updegrove said in court that SEC staff believe that Binance Us might be an unregistered securities exchange. But before that, we've had, uh, we've heard concerns from regulators that Binance Us acquiring Voyager assets might run foul of uh, foreign investment rules and regulations. So, um, I imagine that the Wall Street Journal report from the weekend suggesting that finance has much greater control and access to Binance us will probably be an additional, you know, Spanner in the works of that acquisition. But also, um you know, last week lawmakers asked Binance about what was going on with Binance us. We've heard regulators before, you know, expressed concerns about, you know, the possibility that this is not or Binance us is not an independent exchange. Um All of those concerns I imagine are going to be heightened. And uh yeah, so, so uh also we're the, the Wall Street Journal has something on, of course, our favorite uh staple coin tether. Um So what is this about how they access um banks? That was something, you know, they tether had a long history, at least of, of uh playing what they call, I guess cat and mouse is, I think how it was once described of how they were uh opening up accounts and in places and having to move around funds. So, what is this latest uh piece here with Tether who often tells us that everything's fine. Yeah. So uh a different report, apparently Teter had a, you know, difficult accessing bank accounts and banking services in the past. So not a huge surprise. A lot of crypto companies have had that and we know Teter itself has had, you know, issues with, you know, remaining uh on, you know, with certain bank accounts according to the journal in or, you know, around 2018, Teter uh had some of its clients create fake bank accounts. It used, you know, falsified documents from its clients to basically have, you know, some of its intermediaries access to bank accounts or provide those banking services for it. Um You know, the report referenced to crypto capital Corp, which was the uh shadow bank that you know, was shut down in late 2018 uh by federal authorities in the US and uh Poland, I believe the other country was. Um so obviously, you know, it's not a huge surprise. The main allegations are that, that are had access to banking services by means of, you know, false up by documents by kind of, you know, uh not being accurate or truthful about, you know, what the bank accounts would actually be used for. Um This is actually, you know what I think most interesting to me about this is that uh if you look, you know, a bit more recently at the FTX charging documents against Sam Bank Fried. One of the allegations is that FTX had access to bank accounts by way of companies that lied about what those bank accounts were for. So, I mean, it wasn't this interesting parallel. Well, another parallel, uh, it just reminds me of the HS BC situation with Reggie Fowler. Right. Um, right. Who, who had opened up accounts and said, yeah. Yeah, that's, that's, uh, yeah, gee, it's, uh, it's for real estate. Yeah, maybe, you know, Tedder has responded, um, they published a statement calling it fud. Uh, I don't believe they addressed any of the actual specific allegations in the Wall Street Journal report, but they called it FUD. So, you know. Oh, well, it's fun fud is usually, yeah, like every time you, you know, when something goes it's fud. Oh, ok. Get guys, get over it. Stop using FUD. Just a quick question on the, the Binance Us uh situation. They also went into how Gary Ganzer was approached to head up the, uh, firm. No. Yeah, I mean, I, I, I'm not too surprised. I know a lot of crypto companies would have loved to have, you know, a former regulator on their board or, you know, as an executive and, you know, Binance Us briefly had a former officer of control of the Currency acting controller, Brian Brooks as its CEO. So, um, you know, I think the big question is, you know, just what those communications looked like and to what extent did they, you know, were negotiations, you know, uh, conducted but, um, the fact that Gez did not take on any role at Binance Us, you know, I don't know if there's a lot more to read into it than that, but I'm sure Binance Us was trying to, you know, get as many former regulators. And even now we see Binance hiring a number of former regulators, law enforcement officials. Uh, you know, folks who have that kind of experience to help them, you know, depending on your point of view, either clean up their act or launder their image, you know. So, but either way, not a huge surprise, I think. Well, it is notable that uh the CEO of Binance US ended up being Brian Brooks, uh formerly the uh another prominent US regulator, the OS B OS, the Office of the Control of the Currency and uh he only lasted about three months. So does say something about the, the confidence regulators have in finance. All right, we'll end it there. Nick. Thank you so much. That was Coindesk, managing editor of global policy regulation. Nick Day.

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