Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

The SEC accused crypto exchanges, finance and Coinbase, of violating U.S. securities laws,

offering unregistered securities and operating as unregistered venues, amongst

other charges earlier this week. These are the two biggest crypto exchanges, and they account

for more than half of global cryptocurrency trading volume. Binance was additionally accused

of mixing billions of dollars of customer funds with a separate

trading firm owned by its chief executive, Chang Peng Xiao, known as CZ, and of being involved

in wash trading to inflate its US platforms perceived trading volumes.

The SEC is seeking to prevent the exchanges from violating

securities regulation, requiring them to disgorge all ill-gotten gains and pay a monetary penalty.

At Binance, the regulator is also seeking to permanently ban CZ, the CEO, from acting as an officer or

director of any issuer whose securities are registered with the agency.

In a separate filing, the SEC requested a temporary freeze on the assets of several

Binance linked entities. This rush to freeze the assets was based

on what the SEC alleges was free movement of client funds, merged or rerouted mainly to two trading

firms directly or indirectly owned by Binance Chief Executive CZ. Traders moved more than $800 million out of

Binance in the 24 hours after the lawsuit was announced. And Binance.us announced yesterday

that it was suspending U.S. dollars deposits and that its banking partners are preparing

to pause Fiat dollar withdrawal channels as early as June 13.

After taking his role at the SEC two years ago, Chairman Gary Gensler began encouraging

crypto trading platforms to register with the agency and has argued for quite

some time that most digital tokens qualify as securities.

...