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Justin Sun lashed back at the SEC, claiming the regulator’s charges are unfounded. Sun believes the SEC’s regulatory framework for crypto is in its infancy and needs improvement.
Sun also said he would be prepared to engage with regulatory authorities throughout the globe to develop open standards for dealing with and regulating the cryptocurrency business.
The SEC’s civil complaint earlier today is just the latest example of actions it has taken against well known players in the blockchain and crypto space. We believe the complaint lacks merit, and in the meantime will continue building the most decentralized financial system.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) March 23, 2023
The SEC’s allegation, filed in the US District Court for the Southern District of New York, claims that Sun and his businesses sold TRX and BTT as investment opportunities through multiple unlicensed “bounty programs.” The latest allegedly required participants to advertise the tokens on social media, enlist and recruit others around Tron-affiliated Telegram and Discord channels, and establish BitTorrent accounts in return for token distributions.
The lawsuit claims that Justin Sun, BitTorrent Foundation, and Rainberry sold BTT in unlicensed monthly airdrops, including US investors, who held TRX in Tron wallets or on connected crypto asset trading platforms.
Crypto community reacts to SEC’s moves
The allegations brought by the SEC against Justin Sun and his firms are just the latest example of the agency’s assault on the cryptocurrency market.
The crypto community quickly reacted when Coinbase announced it had received a Wells Notice, a formal notification of an impending enforcement action.
In response, Coinbase CEO Brian Armstrong, whose firm is additionally fighting the SEC on matters staking, started a discussion on Twitter. He described the event as “a step along the way” to reforming the US banking system.
Moreover, Armstrong is confident that the trade complies. Therefore, he welcomed the opportunity to prove it in court.
The legal procedure, he says, will show the SEC’s unfairness and unreasonableness and show that the agency has not demonstrated a seriousness of purpose when it comes to its engagement on digital assets.
2/ Two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase runs a rigorous asset review process and has rejected more than 90% of assets that have…
— Brian Armstrong (@brian_armstrong) March 22, 2023
Caitlin Long, the founder of Custodia Bank, stated that a Wells Notification was delivered to “every exchange” in early February.
She said that US officials are “definitely” going after crypto firms, citing coordinated enforcement actions against Paxos and Kraken.
More crypto crackdowns just dropped. Caitlin gave us the heads up!
— Matt Willemsen (@matt_willemsen) March 22, 2023
In the latest episode of @unchained_pod, she shared a bombshell with @laurashin that U.S. exchanges were issued Wells notices in February and that "there's a lot that hasn't been announced." 👀
More to come,… pic.twitter.com/cXZyPngcEN
Lightspark co-founder David Marcus stated that Coinbase decided to cooperate with authorities and operate lawfully. He criticized how it had been handled by the establishment and asked why the SEC was so lenient with unscrupulous businesses.
From the very beginning @brian_armstrong made the decision that @Coinbase should play by the rules, engage with regulators and lawmakers, and behave like a responsible actor in what used to be a nascent industry. We should be proud of this exact kind of US-born responsible… https://t.co/kiOijgEUfw
— David Marcus (@davidmarcus) March 23, 2023
Polygon’s co-founder Sandeep Nailwal agreed with Marcus, stating he doesn’t understand the issue since Coinbase “is the gold standard of compliance.”
So confused with this notice to @coinbase.
— Sandeep Nailwal | sandeep. polygon 💜 (@sandeepnailwal) March 23, 2023
Coinbase is the gold standard of compliance in crypto. As a regulator, why would you go after the most compliant company of the industry?
Doesn’t it discourage everyone else trying to be US compliant?
Whats going on over there in US? https://t.co/GeeVtfa8d3
Blockchain Association Chief Policy Officer Jake Chervinsky has voiced his displeasure with the agency’s decision. He mentioned the SEC was often blamed for governing by enforcement.
Thankfully, Coinbase is ready to fight and in a strong position to do so successfully as a matter of law.
— Jake Chervinsky (@jchervinsky) March 22, 2023
Remember, the SEC doesn't make the law. It only makes allegations, which ultimately must be tested in the courts.
Often, as here, the SEC is wrong.https://t.co/zSx7xNGZNR
Coinbase has a “war chest and facts on their side,” as Wolf of all Streets Podcast host Scott Melker put it. He predicted the SEC would be defeated in court.
Coinbase is going to bury the SEC in court. They have the war chest and facts on their side. The judicial system has been dunking on the SEC in every available situation.
— The Wolf Of All Streets (@scottmelker) March 22, 2023
Let’s go. https://t.co/HRmH55U1qG
Angel Investor Jason called the issue a power maneuver to push back against bitcoin acceptance.
I predicted long ago that dictatorships would ban crypto first, and democracies would ban it second
— @jason (@Jason) March 22, 2023
What we're seeing in the USA right now is start of the later
Ain't no one in power who would willingly give over their franchise on printing money to… umm… no one!
VanEck Strategic Adviser Gabor Gurbacs said that “there is an all-out fight” against local banks and cryptocurrency. This, he argued, is a “show of force to urge compliance,” citing the recent publication of the United States’ updated CBDC report.
If you really want to know what’s going on, you only need to know this. There is an all out war against the financial sector, regional banks and crypto alike. The recent actions are a show of force to impel compliance. It’s no accident that the new CBDC paper dropped today. pic.twitter.com/v0Y7jZtlQO
— Gabor Gurbacs (@gaborgurbacs) March 22, 2023
The newly announced Bank Fund Term Program (BFTP) would not cover the sorts of assets often held by these smaller companies, which puts pressure on regional banks, as highlighted by former BitMEX CEO Arthur Hayes.
Hayes disagrees with Gurbacs’s pessimism about regional banks and claims the Fed will bless all bank assets in the future.