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SEC Chair Gary Gensler appeared on CNBC’s Squawk Box to discuss the recent lawsuits filed by the SEC against Binance and Coinbase. The lawsuits accuse both platforms of operating as unregistered securities exchanges.
Gensler’s main thrust was that Coinbase, Binance and other crypto exchanges are evading American regulation and that “there’s been clarity for years.”
“It’s fundamentally a lack of controls, deception, [and] conflicts,” Gensler said. “The whole business model is built on non compliance with the US securities laws and we’re asking them to come into compliance so they’re going a bit of ‘catch us if you can.’”
Gensler repeatedly touted the SEC’s claim that Binance CEO Changpeng Zhao commingled customer funds with those of his trading firm Merit Peak Limited as an example of why crypto exchanges need more oversight. Binance denied this allegation.
Binance was a continued target in the interview on CNBC, with fewer mentions of Coinbase. To that end, Gensler suggested that users should think twice about leaving their funds on Binance’s platform.
“Make no mistake, it is not proper custody to have funds and crypto securities on platforms like Binance,” he said.
Gensler also talked about the worth of certain crypto tokens, saying there’s a lot of debate about use cases.
When host Jim Cramer raised several questions about the value of the coins listed as securities in the Binance complaint, such as SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI, Gensler was much clearer.
“Look, we don’t need more digital currency. We already have digital currency. It’s called the US dollar. It’s called the euro. It’s called the yen. They’re all digital right now. We already have digital investments,” Gensler said.
He continued, “We have not seen over the centuries that economies or the public needs more than one way to move value.”
Despite his skepticism of a future where crypto exists alongside fiat currencies, Gensler added that, “if there’s a real value in these crypto tokens, then compliance will build trust and the business model might change” for crypto exchanges.
He further asserted that the SEC’s recent actions are “pro innovation,” striking back at Binance’s claim that his agency is undermining “America’s role as a global hub for financial innovation and leadership.”
“What we’re doing at the SEC is pro innovation because, without trust, the capital markets really don’t work,” Gensler said.
Gensler declined to talk about specific communications between the SEC and the companies in question, but said he remains ready to bring additional crypto exchanges into proper compliance.
In terms of the SEC’s goal in court, Gensler said that all it has to do is prove that one crypto token “is a security” and “should be properly registering.”
Gensler has been in the spotlight for months, as his agency ramps up enforcement against crypto companies. When he testified before Congress back in April, Gensler refused to answer whether ether was a security or a commodity.