Happy Tuesday, readers. I’m Phil Rosen. I’m a day late, but did you see the new episode of Succession? Phew. I’ve already got my popcorn ready for this Sunday.
In other high-stakes drama, US regulators just sued Binance, the world’s largest cryptocurrency exchange.
But it’s not just Binance. The CFTC’s move marks just the latest in a string of regulatory actions in the space.
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1. SEC chairman Gary Gensler has made it clear that he’s going to play the role of sheriff in the Wild West that is the crypto industry, and after last week’s flurry of action from the agency, another regulator is following his agency’s lead.
On Monday, the Commodities Futures and Trading Commission filed a complaint in federal court alleging that Binance violated trading rules.
The filing also named Binance CEO Changpeng Zhao, as well as former chief compliance officer Samuel Lim, and said the pair solicited US customers — especially “lucrative and commercially important ‘VIP'” customers — while ignoring laws.
Now, the CFTC is requesting the court place monetary costs onto the exchange, as well as trading and registration bans.
All this comes just days after the SEC charged a spate of high-profile individuals for fraud and crypto market manipulation.
The regulator named Justin Son of Tron, BitTorrent, and Rainberry, and also called out eight celebrities for illegally touting a token without making proper disclosures.
Lindsay Lohan, influencer Jake Paul, and rappers Lil Yachty and Soulja Boy were among those the SEC named.
The SEC said it’s “neutral” about the technology at hand, but that it’s “anything but neutral when it comes to investor protection.”
“As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities,” the SEC said.
“At the same time, Sun paid celebrities with millions of social media followers to tout those very securities, while specifically directing that they not disclose their compensation.”
Last week, too, crypto giant Coinbase said it received a Wells notice from the SEC, which means the regulator is looking into the company’s practices.
Coinbase’s legal chief said the company was “prepared for this disappointing development” after the SEC said it identified potential violations of securities law.
“The US crypto regulatory environment needs more guidance, not more enforcement,” Coinbase said in a statement responding to the notice. “We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead.”
Gary Gensler at one time actually taught crypto and blockchain classes at MIT, leading many in the space to believe he’d be an ally. That assumption hasn’t quite been proven so far in his tenure.
At the end of 2021, Gensler shot down proposals for spot bitcoin ETFs, and he’s spoken critically of similar digital asset ventures since then.
The SEC warned separately on Thursday that investors are exposing themselves to extreme risk by getting involved in crypto, and doing so could lead to significant losses. That comes months after the total crypto market value saw about $2 trillion erased in a brutal plunge in token prices.
The SEC also warned that the platforms investors use to get involved in crypto aren’t quite airtight, in the regulator’s view.
Here’s how the SEC put it:
“None of the major crypto asset entities is registered with the SEC as a broker-dealer, exchange, or investment adviser — so investors may not get the protections afforded by the rules applicable to these entities.”
In other news:
2. US stock futures trade mixed early Tuesday as banking sector concerns continue to ease. Investors are now awaiting US home price data and The Conference Board’s consumer confidence report, due out later today. Here are the latest market moves.
3. On the docket: Walgreens Boots Alliance, Micron Technology, and McCormick, all reporting.
4. RBC strategists shared a batch of stocks poised to be future winners in artificial intelligence. The technology looks set to transform the world, and these 17 companies from a range of sectors could emerge as top long-term picks. See the full list.
5. A top fund manager said the banking turmoil is actually a win for stocks since the Fed is opening up a cash spigot. Recent chaos in the financial system could boost equities, Unlimited Funds’ Bob Elliot said. He thinks the additional economic stimulation and central bank liquidity is supporting asset prices and the bond market.
6. Tech stocks are now among the most overvalued in the market, according to Barclays. Investors’ flight to safety over recent weeks has boosted tech names, but strategists warned against chasing the rally. Here’s what to know.
7. The World Bank just warned that this could be the start of a “lost decade” for global economic growth. In a report published Monday, the group cautioned that an extraordinary policy push will be necessary to counteract high inflation and financial instability. If not, growth for the next decade could slow to its slowest pace in 30 years.
8. Bank runs have the crypto industry on high alert. Three experts explained why the latest turmoil is particularly worrisome, and what could happen next: “I’m nervous like I was in 2008.”
9. This 28-year-old real estate investor is financially independent. He explained the “most inexpensive way to buy real estate” — and how to score low down payments when you’re starting out with low cash.
10. Shares of First Citizens Bank jumped as much as 55% yesterday. On Sunday, the firm agreed to a deal to acquire assets of collapsed Silicon Valley Bank. Its stock soared to an intraday high of over $898, its highest mark in over a year.