Court Denies SEC Request to Freeze Binance US Assets

A court sitting in the US has denied the request of the Securities and Exchange Commission (SEC) to freeze the assets of Binance’s US subsidiary, Binance.US. The presiding judge, judge Amy Berman declined the request to freeze the exchange’s assets as investigations are ongoing.

The SEC made the request to the court only a day after suing Binance for violating securities laws. This was to enable the SEC carry out further investigations to prove its case against the exchange which has come under regulatory scrutiny.

The exchange has since made several adjustments, including delisting of trading pairs of crypto assets regarded as securities by the SEC. This was in an attempt to continue operation as the case is ongoing. Ohter adjustments include securing the assets of the exchange’s customers, giving the private keys to US personnel, and providing regular accounting for the assets, but the SEC rejected the proposal.

Fortunately for Binance, the ruled yesterday 13 June in US District Court for the District of Columbia that there was no need to freeze the assets of the exchange. This means the exchange will continue normal operations while the case proceeds and as things unfold.

Binance and SEC to Continue Negotiations

In the ruling, judge Berman said it was not necessary to issue a temporary restraining order, i.e the freezing of Binance’s assets if the two parties can agree on a compromise. The SEC and Binance therefore were ordered to continue negotiations and brief the court by Thursday next week.

The judges decision came after the SEC couldn’t present any evidence that Binance.US was transferring customers’ assets overseas. The judge also condemned the SEC’s approach of regulation by enforcement, saying it was “inefficient and cumbersome.” This comes as an exciting development for the crypto community worldwide.

Crypto influencers and lobbyists have also sent letters to the SEC as public opinion concerning the rule and the method the commission has employed in carrying out its duties. According to the letters, the SEC was going beyond its constitutional boundaries and may be infringing on the rights of citizens.

The SEC’s Enforcement Approach

The SEC has been keen on the crypto industry for long, but its approach has done more damage than good to the industry and US investors. Gary Gensler, the current SEC chairman has adopted a method that uses enforcement as its major approach of regulation.

The commission has sanctioned Coinbase, an indigenous US crypto exchange, as well as Binance. This was what led to the creation of Binance.US, an arm of Binance that is available to US customers, since they had been cut off from Binance global due to pressure from the SEC.

Gensler mostly claims to be protecting the US customers, but US customers themselves are not happy with this approach which is affecting them negatively as they try to invest.

Binance and SEC will brief the court on Thursday on their conclusion, which will be interesting to know as this will be an important aspect of the court proceedings. Should the SEC refuse to compromise, the court may be forced to make another decision which could favor the crypto exchange and community as a whole.

Meanwhile, other crypto exchanges are also making adjustments to ensure compliance so that the SEC doesn’t come after them.

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Turks Turn to Crypto as Economic Woes Worsen

Turkish citizens are turning to cryprocurrencies amidst growing economic challenges. According to reports, more Turks are renewing their interest in crypto as the economy bites harder, especially as the Turkish Lira continues to lose value.

Over the past years, the Turkish Lira has depreciated in value to a great extent, reaching up to 85% decline. This followed poor economic policies that have thrown the country into abject poverty, at which time the citizens started turning to cryptocurrencies, especially Bitcoin.

This time around however, Turks are showing the most interest in the biggest stablecoin by market cap, USDT. The interest in crypto is also fueled by the overwhelming concern about looming inflation that is expected to engulf the country.

Turkey’s leader, Recep Erdogan has been in power in the years that the Lira has depreciated, but is known for his anti-crypto stance. This has not deterred the citizens from pursuing cryptocurrencies however, as they see no other way out of there economic quagmire.

This is because cryptocurrencies have over the years proven to be viable stores of value. Looking at bitcoin for instance, the cryptocurrency popularly known as digital gold has appreciated to $60,000 last year before a crash.

Despite the volatility that characterizes cryptocurrencies, they seem to appreciate over time, compared to fiat currencies such as the Turkish Lira.

Using USDT as a Hedge

Stablecoins are by design less volatile than conventional cryptocurrencies. This does not take away the speed of their transactions which also characterizes cryptocurrencies. As a result, using the Lira to buy USDT will ensure that inflation doesn’t affect the value of the money since the value of USDT is fixed at roughly $1.

The Lira recently hit a record low value against the US Dollar, which has increased concerns around the inflation that has ravaged the country for years. Using the stablecoin therefore is a strategy to preserve income at roughly the same value as the USD.

USDT is popular not just in Turkey but in other countries as well, especially in countries where there is major inflation causing depreciation of the local currency against the USD. With its fixed value, it is expected to rescue them from local inflation.

Increasing Interest in Crypto

Cryptocurrencies have come a long way, and though they faced a lot of resistance at first, there is general increasing interest in the industry now. This is evident by the attention of institutional investors that the industry is getting.

Even mainstream financial institutions are now embracing crypto, because of the potentials the assets show. Recently, Russian banking giant Sberbank announced it will be giving its customers access to cryptocurrencies. This is not the first bank to start providing crypto services to customers and certainly won’t be the last because the industry is growing quite fast.

Also because fiat currencies like the Turkish Lira are designed to suffer inflation, people are starting to realize that cryptocurrencies are a better store of value rather than holding fiat currencies. Like the Turkish people, more of the world will soon be turning to crypto as they come to realize that their fiat currencies are not to be trusted.

If the concern is the volatility of crypto, stablecoins like USDT serve perfectly as a stable currency that holds their money in roughly the same value as the USD.

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Hong Kong Lawmaker Extends Invitation to Coinbase, Other Crypto exchanges

A Hong Kong Lawmaker, Johnny NG has extended an invitation to digital currency exchanges around the world to come to the administrative region of China. Ng in a tweet invited crypto exchanges to apply for official trading platform status.

“I hereby offer an invitation to welcome all global virtual asset trading operators including @coinbase to come to HK for application of official trading platforms and further development plans. Please feel free to approach me and I am happy to provide any assistance,” the tweet said.

It isn’t clear if the lawmaker is extending the invitation on behalf of the government of Hong Kong or he did it independently, but he is definitely a lawmaker interested in cryptocurrency and all that it represents. A look at his Twitter feed will tell you this as his posts are mostly about one crypto gathering or the other.

Ng’s disposition is however a reflection of Hong Kong’s disposition, because the region has also shown tremendous support for cryptocurrencies and is currently one of the top places that crypto startups are running to.

While Hong Kong does not play with the security of crypto investors, it is also interested in allowing the industry grow so that everyone will benefit.

The Opposite of the US

The US has been very hot for crypto exchanges in the last week, with two of the top crypto exchanges, Coinbas and Binance getting sued by the SEC in 24 hours. Sinc then, the exchanges have made som changes such as delisting crypto trading pairs in order to stay afloat in the midst of SEC’s regulatory crackdown.

To make matters worse, the US doesn’t have any regulatory framework for the industry, making it difficult for crypto companies to live up to the expected standard. The SEC chair, Gary Gensler however argues that there is sufficient guidance for crypto exchanges, which he said should be registered with the SEC since they trade in cryptocurrencies the commission considers to be securities.

JP Morgan strategists after analyzing the situation, are of the opinion that crypto exchanges may be forced to register with the SEC in the US as they are likely to be overwhelmed by the ongoing court cases.

“Eventually, the SEC position might be confirmed by lawmakers and Coinbase, Binance.US and other U.S. exchanges would have to register as brokers and most cryptocurrencies would be treated as securities.”

“This could be more onerous and more costly for the crypto industry but there could be positives as well, as crypto markets would be subjected to similar regulations applied to traditional markets such as equities and thus offer more transparency and investor protection,” the note added.

They also argued that this may lead to drafting of a regulatory framework for the industry by the lawmakers, but Hong Kong didn’t need to force crypto exchanges to register with mainstream regulators before bringing a regulatory framework.

Will Crypto Exchanges Accept the Invitation?

Right now, the regulatory pressure in the US has made even indigenous crypto exchanges like Coinbase and Gemini to look outside the country for opportunities. The invitation from Ng is therefore a timely one, but will Coinbase and Binance honor it?

Already, many crypto exchanges like OKX have set up their offices in Hong Kong and many more are trooping there prior to this invitation. Indeed, Hong Kong may become the next crypto hub of the world with such a trend.

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Crypto Custody Firm BitGo Set to Acquire Prime Trust

The popular crypto custody platform in Palo Alto BitGo, plans to acquire Prime Trust at an undisclosed price. A source privy to the matter revealed that the BitGo team has been seeking to close the Prime Trust acquisition deal.

A person familiar with the matter stated that BitGo’s negotiation to acquire Prime Trust had reached its preliminary stage. At this stage, BitGo must seek regulatory approval to acquire the troubled crypto custodial firm.

BitGo Plans to Acquire Prime Trust

Recently the Prime Trust has been the center of the discussion following a debate on the company’s financial health. The community argued that Prime Trust was at the edge of liquidation.

A blog post shared by BitGo revealed that the firm had signed a term sheet for acquiring Prime Trust. In support of this, the chief executive of BitGo, Mike Belshe, confirmed that the decision to acquire Prime Trust would support the firm in providing innovative solutions.

Belshe expressed delight that the acquisition would support BitGo in broadening its geographic presence and attracting a large clientele.

Elsewhere Jor Law, the chief executive of Prime Trust, argued that BitGo’s acquisition was an important milestone for the growth of the crypto sector. Law is opportunistic that the collaboration between BitGo and Prime Trust would lead to the development of revolutionary products and services.

Based on Law analysis, the collaboration will strengthen the existing workforce in terms of knowledge sharing and expertise. He added that the crypto custodial company would provide world-class products transforming the crypto sector.

Factors Contributing to Growth of Crypto Custodial Sector

Initially, the Prime Trust team provided essential services in storing cryptos to institutional and retail investors. The Prime team has strived to provide exceptional custodial services, cemented that firm at a considerable value.

In 2022 the Prime team generated $107 million in a series B funding round led by FIS, Kraken Ventures, and Mercato Partners. At that time, the company withheld information about its valuation.

However, it was reported that the investment was invested in expanding Prime’s wealth management products. The Prime team confirmed that the $ 107 million would be utilized in developing Web3 and decentralized finance (DeFi) products.

After Prime’s successful funding round, the bears invaded the crypto market, causing the prices of digital assets to establish a dribbling momentum. The uncertainty in the market triggered by the prolonged crypto winter has limited the growth of Prime Trust.

Earlier in January, Prime Trust reduced its workforce by a third to remain operational. Days after dismissing the Prime core team, the company revealed plans to wind down operations in Texas and abandon the ongoing registration processes to acquire a money transmitter license.

The crypto custodial sector has recently experienced modest changes due to technological development and innovation. The growth in the custodial sector has challenged the United States Securities and Exchange Commission (SEC) to push for the drafting of new rules.

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Vitalik Buterin Issues a Roadmap for Addressing Ethereum Scaling, Privacy and Wallet Security Issues

Vitalik Buterin, the co-founder of the second largest crypto asset by market value, Ethereum, issued a synthesized roadmap for the technical transition of the network. In a blog post dated June 9, Buterin explained three fundamental aspects that would improve Ethereum scaling, privacy, and security.

He explained the importance of the technical transition in improving the sustainability of the Ethereum network. In the Buterin post “the three transitions,” he elaborated on the technical feature the Ethereum team should prioritize.

Scope of Vitalik Buterin Blog Post

Buterin stated that the firm would focus on providing the user with a permissionless blockchain network that supports the protocol’s functionality. 

Buterin underscored the need for the three technical transitions documented on his blog post. However, the 29-year-old computer programmer stated that the necessary transition for the Ethereum network required effective collaboration to resolve the technical issues.

In his report, Buterin mentioned that the transition would involve layer 2 scaling, wallet security, and privacy tools. The initial component, which involves layer 2 scaling, will support Ethereum in overcoming scaling and data concerns.

A recent statistic shared by the Ethereum group revealed that the network supports around 1.5 million transactions daily. Ideally, on the Ethereum mainnet, the network processes 15 transactions after every second.

Recently the Layer-2 ecosystem has gained popularity due to its cost-effectiveness. However, since most of the Layer 2 transactions are completed on the main chain, Buterin highlighted the need to improve the scaling of the Ethereum network.

It implies that in case the protocol experiences high network activity, the mainnet would suffer from data congestion.

Importance of Improving Ethereum Scalability

As reported by Buterin, if Ethereum experiences scalability concerns due to massive transactions when processing products in the mass market, then the user might opt to adopt the centralized approach. He noted that a heavy workload on the main chain results in the shift of transactions to other chains.

The subsequent component of Buterin’s technical transition roadmap involves wallet security. Wallet security consists of a modus operandi that moves user wallets across smart contract wallets. The shift to a smart contract wallet will support the performance of account abstraction features on the protocol, such as social recovery.

Buterin mentioned the benefits of social recovery wallets in improving wallet security and boosting user experiences. 

Based on the Buterin report, security concerns limit users from storing their crypto and data on the on-chain network. Such limitations will compel most users to opt for centralized wallets.

Irrespective of this, Buterin noted that any privacy breaches on the Ethereum network would result in disclosing confidential customer information to the public which will lead to ethical concerns. In his transition roadmap, Buterin mentioned the need to improve user privacy.

Therefore, to achieve the expected transition, Buterin stated that not only will the features of the Ethereum protocol undergo further development, but the crypto firm will also work on improving the application and the wallets. 

Overview of Ethereum Latest Upgrades

Commenting on Buterin’s three transition roadmap, the co-founder of StarkWare, Eli Ben-Sasson, stated that proposed remedies would stimulate the growth of the Ethereum use case. Ben-Sasson mentioned the benefits of using smart contract wallets.

Initially, Ben-Sasson and his team integrated the smart contract wallet on their StarkNet platform. He remains optimistic that Buterin’s latest proposal will steer the Ethereum network toward success.

Buterin proposed changes came months after integrating zero knowledge rollups on the Layer-2 network. In late March, Polygon Labs launcehd zero-knowledge Ethereum Virtual Machine (zkEVM) that enabled developers to explore the Web3 sector.

The zkEVM platform aims to support developers in creating innovative solutions to improve the zero-knowledge space. Before this, the Berlin-based Ethereum scaling platform Matter Labs launched zkSync Era to the public.

The zkSync utilizes the Account Abstraction technology, which excludes the user from paying Ether transaction charges. Beyond this, the Ethereum company had announced plans to invest in major upgrades dubbed Dencun. The Dencun upgrade will integrate photo-dank sharding to reduce the cost of the rollups.

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Massive Outflow Hits Binance Following SEC Lawsuit, DeFi Volume Spikes

Following the lawsuit by US Securities and Exchange Commission (SEC) against world’s largest crypto exchange Binance, there has been a huge outflow of assets from the exchange, a report by Cointelegraph says.

Data shared by crypto analytic firm Nansen with Cointelegraph, reveals that $778 million worth of assets were withdrawn on the Ethereum blockchain. Binance US also recorded a net outflow of $13 million in assets in the last 24 hours.

The lawsuit also affected Binance’s reserve assets, which lost $1.4 billion within the first hour after announcement of the SEC lawsuit. This represents a total of 2.6% of the exchange’s total reserve of $52.9 billion.

It appears that the lawsuit has scared investors significantly due to the uncertainties surrounding the exchange as a result of the lawsuit, hence the massive outflow of assets.

Although Binance has since responded to the allegations by the SEC, this doesn’t seem to have restored confidence in the embattled company.

Crypto Market Suffers Downtrend

Meanwhile, the entire crypto market has suffered a downward trend since the news of charges filed against Binance by the SEC got out. Bitcoin, the leading cryptocurrency, is currently hovering over $25,000, which is the lowest level it has been in over two months.

Traders Crypto Ed and Crypto Tony believe the asset may be heading to $24,000 before any reasonable bounce since it lost the $26,200 bounce target. This means the rest of the market may be experiencing worse if this prediction plays out.

The SEC is accusing Binance of disregard for federal laws, deception, lack of disclosure, among other charges, making a total of 13 charges. The case is a part of a general crackdown on the crypto market in the US that has been going on for months.

However, the crypto market has since recovered from the crash and even though it is still red, this may not be directly as a result of the lawsuits against crypto giants Binance and Coinbase. Bitcoin currently is above $26,000, which is remarkable.

As against the predictions by the top traders, the top cryptocurrency has reclaimed this key level without dropping to the predicted $24,000 price. Could this be a sign that the bad days are over? Only time can tell, but for now, the effect of Binance’s lawsuit seems to have worn off.

DeFi Sees Boost in Trading Volume

As ouflows hit Binance and Coinbase, DeFi platforms had a good day as their trading volume wen up over 400%. Investors clearly transferred their investments to decentralized exchanges in an effort to avoid whatever could become the impact of SEC crackdown on these top exchanges.

Data from CoinGecko shows that total daily trading volumes on Uniswap v3 (Ethereum), Uniswap v3 (Arbitrum) and PancakeSwap v3 (BSC) increased by more than $792 million in two days. It should be noted that these platforms account for a large chunk of the total DEX trading volume.

Another DEX platform that experienced a surge in activity is Curve, a platform that allows for the trading of stablecoins. The volume increased by 328%, with most of the trading activity focused on trading the U.S. dollar-pegged stablecoins USD Coin.

It may take a while for Binance and Coinbase to regain their trading volumes, especially as the case is still ongoing. However, their victory against the SEC may make all the difference for the crypto space as a whole.

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Binance.US Halting Fiat Withdrawals and US dollar Deposits Following SEC Regulatory Pressure

On Thursday, the Binance US team issued a report on suspending US dollar deposits. The Binance team stated that its banking partners are working on halting fiat dollar withdrawals as of June 13. From June 9, the Binance US team intends to suspend US dollar deposits, followed by the delisting of trading pairs backed by the US currency.

The announcement came days after the crypto exchange was sued by the US Securities Exchange Commission (SEC) and the chief executive Changpeng “CZ” Zhao for contravening the law. As per the court filing, Binance accused Zhao of rerouting approximately $12 billion to his firms.

Binance Suspends Withdrawal and Deposits

In a statement on Twitter issued today at 0233 GMT, the crypto exchange confirmed that the suspension of withdrawal and depository services was among the Binance proactive measures. The tweet mentioned that during the current transition to a crypto-only exchange, Binance considered taking proactive steps. 

Meanwhile, the Binance team has confirmed that its platform’s trading, deposit, withdrawal, and staking services will continue to operate amid the ongoing legal troubles. 

On June 8, the SEC issued a report to the Federal court proposing that Binance assets should be partially frozen. Responding to the SEC proposal, the chief operating officer at Stack Funds, Matthew Dibbs, argued that suspending withdrawals has sparked worry among Binance users.

Dibbs stated that even though Binance US has smaller operations than Binance.com, suspending the firm’s core business would cause panic.

He lamented that from last week the largest crypto exchange by daily trading volume has been under regulatory scrutiny. This has prompted Binance to take meaningful steps to overcome regulatory limbo.

Impact of SEC Clamp Down on Crypto Assets

Surprisingly, the SEC charges on leading crypto exchange such as Binance and Coinbase has triggered Bitcoin, among other major digital assets, to react to the news.

As of this publication, it was reported that Bitcoin (BTC) failed to break the $27000 resistance level. According to CoinMarketCap, BTC is trading at $26587.39, with a modest increase of 0.59% over the last 24 hours.

While Binance native token BNB trades at $258.84, down by 1% in a day. As the SEC regulatory pressure intensifies, the popular market analyst at IG market Tony Sycamore noted that the reaction of most crypto assets has lately been unnoticed. 

An announcement conveyed by Binance. US revealed that the ongoing regulatory clampdown by the SEC is quite aggressive and intimidating. The crypto exchange announced plans to prioritize protecting Binance’s key stakeholders from the SEC’s legal actions.

Futhermore, critics have lodged numerous claims against the SEC chair Gary Gensler concerning the SEC enforcement actions. In his earlier report, Gensler opposed the market speculations that the SEC is trying to limit the growth of the crypto sector.

According to Wayne Huang, the chief executive of XREX, the current regulatory pressure on the crypto sector will compel key market players to pursue effective ways to boost user experiences.

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