CRIMINAL CRYPTO CAPITALI$M
Binance U.S. exchange sued by crypto investor over stablecoin collapse
The logo of Binance is seen on their exhibition stand at the Delta Summit, Malta's official Blockchain and Digital Innovation event promoting cryptocurrency, in Ta' Qali
By Luc Cohen
June 13, 2022
NEW YORK (Reuters) -Binance U.S. and its CEO were sued on Monday by a U.S. investor who alleges the cryptocurrency exchange falsely marketed Terra USD as a safe asset ahead of the so-called stablecoin's collapse in value last month.
Stablecoins are digital tokens pegged to the value of traditional assets, such as the U.S. dollar, and are popular as safe havens in times of turmoil in crypto markets. But Terra USD's value plunged last month, breaking its 1:1 dollar peg and contributing to a tumble in other crypto assets like Bitcoin.
In the lawsuit against Binance and Chief Executive Brian Shroder, Utah resident Jeffrey Lockhart said Binance falsely advertised Terra USD as "safe" and backed by fiat currency, when in fact it was an unregistered security.
Lockhart said Binance's failure to register with the U.S. government as a securities exchange limits disclosure about assets traded on the platform, harming investors.
"Binance and other exchanges were critical enablers of this devastating failure to comply with the securities laws," said Tibor Nagy of law firm Dontzin Nagy & Fleissig, which represents Lockhart. "Crypto exchanges made massive profits by flouting securities laws and causing real harm to real people."
A Binance spokesperson said the exchange is registered with the Financial Crimes Enforcement Network (FinCEN) - a unit of the U.S. Treasury Department - and complies with all applicable regulations.
"These assertions are without merit and we will defend ourselves vigorously," the spokesperson said in a statement, adding that the exchange will delist Terra USD, a decision made before the lawsuit was filed.
Lockhart is seeking to have himself and other investors who bought Terra on Binance registered as a class.
In a separate lawsuit in 2020, investors accused Binance of selling unregistered tokens and failing to register as an exchange or broker-dealer.
A federal judge in Manhattan dismissed that case in March, stating that the investors had waited until too long after their losses to sue and that U.S. securities law did not apply because Binance was not a domestic exchange. The investors are appealing.
Lockhart's lawsuit, by contrast, targets Binance's U.S. unit and comes just weeks after Terra USD's collapse.
His suit comes after a bipartisan group of U.S. Senators last week proposed legislation to have the Commodity Futures Trading Commission (CFTC), not the Securities and Exchange Commission (SEC), play the primary role in regulating crypto.
The CFTC is generally seen as friendlier toward cryptocurrencies, as the SEC has found crypto assets should be seen as securities.
Cryptocurrencies continued their slide on Monday, with Bitcoin touching an 18-month low and No. 2 token ether tumbling as much as 18%.
(Reporting by Luc Cohen in New York;Editing by Noeleen Walder and David Evans)
NEW YORK (Reuters) -Binance U.S. and its CEO were sued on Monday by a U.S. investor who alleges the cryptocurrency exchange falsely marketed Terra USD as a safe asset ahead of the so-called stablecoin's collapse in value last month.
Stablecoins are digital tokens pegged to the value of traditional assets, such as the U.S. dollar, and are popular as safe havens in times of turmoil in crypto markets. But Terra USD's value plunged last month, breaking its 1:1 dollar peg and contributing to a tumble in other crypto assets like Bitcoin.
In the lawsuit against Binance and Chief Executive Brian Shroder, Utah resident Jeffrey Lockhart said Binance falsely advertised Terra USD as "safe" and backed by fiat currency, when in fact it was an unregistered security.
Lockhart said Binance's failure to register with the U.S. government as a securities exchange limits disclosure about assets traded on the platform, harming investors.
"Binance and other exchanges were critical enablers of this devastating failure to comply with the securities laws," said Tibor Nagy of law firm Dontzin Nagy & Fleissig, which represents Lockhart. "Crypto exchanges made massive profits by flouting securities laws and causing real harm to real people."
A Binance spokesperson said the exchange is registered with the Financial Crimes Enforcement Network (FinCEN) - a unit of the U.S. Treasury Department - and complies with all applicable regulations.
"These assertions are without merit and we will defend ourselves vigorously," the spokesperson said in a statement, adding that the exchange will delist Terra USD, a decision made before the lawsuit was filed.
Lockhart is seeking to have himself and other investors who bought Terra on Binance registered as a class.
In a separate lawsuit in 2020, investors accused Binance of selling unregistered tokens and failing to register as an exchange or broker-dealer.
A federal judge in Manhattan dismissed that case in March, stating that the investors had waited until too long after their losses to sue and that U.S. securities law did not apply because Binance was not a domestic exchange. The investors are appealing.
Lockhart's lawsuit, by contrast, targets Binance's U.S. unit and comes just weeks after Terra USD's collapse.
His suit comes after a bipartisan group of U.S. Senators last week proposed legislation to have the Commodity Futures Trading Commission (CFTC), not the Securities and Exchange Commission (SEC), play the primary role in regulating crypto.
The CFTC is generally seen as friendlier toward cryptocurrencies, as the SEC has found crypto assets should be seen as securities.
Cryptocurrencies continued their slide on Monday, with Bitcoin touching an 18-month low and No. 2 token ether tumbling as much as 18%.
(Reporting by Luc Cohen in New York;Editing by Noeleen Walder and David Evans)
South Korean exchanges cooperate to prevent another Terra-LUNA debacle
Danny Park
Mon, June 13, 2022
To protect the country’s investors, South Korea’s top five crypto exchanges are forming a joint council to monitor the listing and delisting of cryptocurrencies.
See related article: S. Korea finance regulator to audit Terra and related exchanges
Fast facts
Upbit, Bithumb, Coinone, Korbit and Gopax, five exchanges authorized to provide cash-to-crypto services in Korea, will form a joint council that will establish token listing standards, and communicate with each other in “unforeseen situations.”
Beginning in September, the council aims to prepare token delisting standards, a warning system for possibly unsafe assets, and prepare white papers and evaluation reports, an agreement announced in the National Assembly meeting on Monday said.
In October, the council will prepare a guideline for listing cryptocurrencies and reviewing tokens for any signs of a Ponzi scheme, the exchanges said.
The exchanges also promised to respond in unison within 24 hours to any crisis like Terra-LUNA.
Beginning in January 2023, the voluntary council plans to mandate that new crypto investors watch an educational video on digital assets before being allowed to trade.
According to local media reports, the agreement was prompted by criticism that varying responses from exchanges to the Terra-LUNA crash increased confusion among investors.
Danny Park
Mon, June 13, 2022
To protect the country’s investors, South Korea’s top five crypto exchanges are forming a joint council to monitor the listing and delisting of cryptocurrencies.
See related article: S. Korea finance regulator to audit Terra and related exchanges
Fast facts
Upbit, Bithumb, Coinone, Korbit and Gopax, five exchanges authorized to provide cash-to-crypto services in Korea, will form a joint council that will establish token listing standards, and communicate with each other in “unforeseen situations.”
Beginning in September, the council aims to prepare token delisting standards, a warning system for possibly unsafe assets, and prepare white papers and evaluation reports, an agreement announced in the National Assembly meeting on Monday said.
In October, the council will prepare a guideline for listing cryptocurrencies and reviewing tokens for any signs of a Ponzi scheme, the exchanges said.
The exchanges also promised to respond in unison within 24 hours to any crisis like Terra-LUNA.
Beginning in January 2023, the voluntary council plans to mandate that new crypto investors watch an educational video on digital assets before being allowed to trade.
According to local media reports, the agreement was prompted by criticism that varying responses from exchanges to the Terra-LUNA crash increased confusion among investors.
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