SEC vs Binance

[NotATether]

(if they want to properly back a stable coin with actual gold then its storage needs to be paid).

Which is why it's the dumbest idea to make a gold stablecoin, or any precious metal stablecoin for that matter. The minters are not even guaranteed to have liquidity in the first place, and usually they don't anyway. It's not like anyone's going to go back to Bretton Woods agreement any time soon.

[zasad@]

I don't expect the SEC to have much impact on Binance. Binance could easily move to the right jurisdiction and issue a new stablecoin with ratio 1:1 to busd. Or take other steps. there are games just behind the scenes right now

So you don't understand what's going on. I think the CEC and other organizations in the US have a lot of leverage to force Binance not to issue new stablecoins. Stablecoins are not needed because governments want to force citizens to use CBDC.

[pawel7777]

Which is why it's the dumbest idea to make a gold stablecoin, or any precious metal stablecoin for that matter. The minters are not even guaranteed to have liquidity in the first place, and usually they don't anyway. It's not like anyone's going to go back to Bretton Woods agreement any time soon.

Gold-backed tokens have been around for a while, i.e. Pax Gold: https://paxos.com/paxgold/
They don't have to set up any storage themselves, but would rather use trustworthy, reputable, and much cheaper 3rd parties like Swiss banks, or, in the case of Pax Gold - LBMA (London-based precious metals authority).

Not sure how they generate a profit on that though, probably it's just initial issuance and redemption fees, so much less attractive than fiat-based stablecoins, where most of the profit would be generated from interest on clients' deposits.

[dansus021]

A rather strange situation. Allegedly the SEC has labeled it as security and is suing Paxos, which, if true, was likely the reason behind NYDFS ordering them to cease issuing new tokens.


https://twitter.com/milesdeutscher/status/1624953792872718336

That's bizarre, if anything, BNB would fall much closer to being security than BUSD.

I agree with this one, I mean this was basically a US Dollar not an investment. BNB and other coin like XRP is much closer. SEC seems hate very much about crypto industry since its very hard to regulate all of them.

And funds are SAFU!!

This is CZ biggest mantra that funds are safu I just opened Paxos Report and most of the money was in the form of US Treasury Bills Well if this true I think the money are safe but they cant redeem all of it in one time, right? [Report : https://paxos.com/wp-content/uploads/2023/02/BUSD-Daily-Stablecoin-Reporting-as-of-2.16.2023-1.pdf]

And Lastly, in my opinion if BUSD/Paxos was won maybe SEC would stop chasing other stablecoin but if they lose they will come to other stablecoin and we might see little bit shaking in the market.

[pawel7777]

... most of the money was in the form of US Treasury Bills Well if this true I think the money are safe but they cant redeem all of it in one time, right?

Not 100% sure, but usually there would be some option to cash in bonds before they mature with some small penalty. Or, most likely, US treasuries can be just traded on the open market. Some of the RRPs have maturity dates as late as 2049, there's no way they would hard-lock any funds for that long without an option to terminate early.
So Paxos should be able to service any withdrawal/conversion requests in a relatively short time if it comes to that.

[dansus021]

Not 100% sure, but usually there would be some option to cash in bonds before they mature with some small penalty. Or, most likely, US treasuries can be just traded on the open market. Some of the RRPs have maturity dates as late as 2049, there's no way they would hard-lock any funds for that long without an option to terminate early.
So Paxos should be able to service any withdrawal/conversion requests in a relatively short time if it comes to that.

Agree us treasuries cant be traded early but the price might fluctuate. and yeah I also believe that they might think about that too. for now, CZ said that busd can be redeemed to original dollar. and I hope everything will settle again I don't hope another fud happen 

[NeuroticFish]

(if they want to properly back a stable coin with actual gold then its storage needs to be paid).

Which is why it's the dumbest idea to make a gold stablecoin, or any precious metal stablecoin for that matter. The minters are not even guaranteed to have liquidity in the first place, and usually they don't anyway. It's not like anyone's going to go back to Bretton Woods agreement any time soon.

Well, there are people fond of gold, people who want to use gold-equivalent coins. Many see it as a store of value, some even more than bitcoin. I won't debate whether they're right or wrong.
At some point in the past I was advertising one such stable coin and... they were charging their users for that storage (!), it was part of the business model.

But, yes, we're on the same page: the logistics of reimbursing in case such a coin/business collapses may be pretty complicated (as you said, liquidity...)

Gold-backed tokens have been around for a while, i.e. Pax Gold: https://paxos.com/paxgold/
They don't have to set up any storage themselves, but would rather use trustworthy, reputable, and much cheaper 3rd parties like Swiss banks, or, in the case of Pax Gold - LBMA (London-based precious metals authority).

Not sure how they generate a profit on that though, probably it's just initial issuance and redemption fees, so much less attractive than fiat-based stablecoins, where most of the profit would be generated from interest on clients' deposits.

If they don't store the gold, they have to pay to those storing and guarding it.
And the profit? May come from various operational fees they take, may come (sooner or later) from playing with fractional reserve, .. I've never heard of anybody who's issuing money to be (or stay) poor 

[pawel7777]

for now, CZ said that busd can be redeemed to original dollar. and I hope everything will settle again I don't hope another fud happen 

Fud is an inseparable part of the crypto ecosystem. I don't think we've ever seen any few months period without bigger or smaller fud going on.
As for Binance, it really starting to look like US regulators are set on not letting them grow too big.
But if they can handle moving away from Paxos smoothly, it would add to their credibility, and to Paxos' as well.

If they don't store the gold, they have to pay to those storing and guarding it.
And the profit? May come from various operational fees they take,

Sure but the costs of them paying for storage are much lower than if they were to store it themselves.
And yup, looks like they're charging some small fees on each on-chain transaction. From their whitepaper:

For transactions that occur on-chain (transferred via Ethereum), there is a low Paxos transaction fee (0.02%) as well
as the usual Ethereum gas fees (typically a few cents).

[QuinielaPosible]

They will keep spreading fud until they are heavily invested like everyone else does

[zasad@]

One of the possible scenarios:
The US government is forcing all crypto exchanges to buy US bonds with customer dollars.
As soon as crypto exchanges have a huge portfolio of bonds, a huge FUD is created in the market.
The US government is buying back its bonds at a huge discount, the price of cryptocurrencies is falling. Stablecoins are losing their peg to the dollar.

[Kryptowerk]

for now, CZ said that busd can be redeemed to original dollar. and I hope everything will settle again I don't hope another fud happen 

Fud is an inseparable part of the crypto ecosystem. I don't think we've ever seen any few months period without bigger or smaller fud going on.
As for Binance, it really starting to look like US regulators are set on not letting them grow too big.
But if they can handle moving away from Paxos smoothly, it would add to their credibility, and to Paxos' as well.

Not too suprising given the almost monopoly-standing of Binance right now, especially given the fact it is not a US company but (in a way) a Chinese one.
I think this will repeat with other unregulated exchanges that are going to rise to or near the top. Unless of course you play buddy-buddy with big corps, as FTX did. On a side note: funny how news about FTX almost seem to have seized to exist.

Back to topic. It's very clear that regulators are trying to stop unregulated (stable) coins, the question is: Will/can they ever succeed?

[dansus021]

Not too suprising given the almost monopoly-standing of Binance right now, especially given the fact it is not a US company but (in a way) a Chinese one.
I think this will repeat with other unregulated exchanges that are going to rise to or near the top. Unless of course you play buddy-buddy with big corps, as FTX did. On a side note: funny how news about FTX almost seem to have seized to exist.

Back to topic. It's very clear that regulators are trying to stop unregulated (stable) coins, the question is: Will/can they ever succeed?

It is, binace is trying too monopoly before FTX collapse it want to acquired too. and binance is already acquired - Indonesian Crypto Trading Firm Tokocrypto (https://www.coindesk.com/business/2022/12/19/binance-finalizes-acquisition-of-indonesian-crypto-trading-firm-tokocrypto/) 

I dont know when SEC stop regulating crypto I thinks is Imposible if they want to try regulated all of them

[zasad@]

Sam Bankman-Fried was a hired hand or a useful idiot for a specific list of tasks. CZ is much smarter than Sam Bankman-Fried and doesn't want to be a useful idiot.
SEC will regulate all crypto projects and say who is bad and who is good.

[safar1980]

CZ’s Response to the CFTC Complaint
Today, the CFTC filed an unexpected and disappointing civil complaint, despite our working cooperatively with the CFTC for over two years.

Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint. While we will only be able to give full responses in due time, we will address a few key points below.

[pawel7777]

CZ’s Response to the CFTC Complaint
Today, the CFTC filed an unexpected and disappointing civil complaint, despite our working cooperatively with the CFTC for over two years.

Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint. While we will only be able to give full responses in due time, we will address a few key points below.

Good for him for a quick and detailed response, but the effort is probably futile.
At this point, the message is pretty clear, US want to chase Binance of their market (or maybe from other markets in countries under US influence). Possibly only as part of the wider crack down on crypto, or maybe as an element of USA Vs China game of economical dominance.

The way it looks like, doesn't matter what Binance will do in terms of compliance. They'll always find a way to hit them.

[coupable]

CZ’s Response to the CFTC Complaint
Today, the CFTC filed an unexpected and disappointing civil complaint, despite our working cooperatively with the CFTC for over two years.

Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint. While we will only be able to give full responses in due time, we will address a few key points below.

Good for him for a quick and detailed response, but the effort is probably futile.
At this point, the message is pretty clear, US want to chase Binance of their market (or maybe from other markets in countries under US influence). Possibly only as part of the wider crack down on crypto, or maybe as an element of USA Vs China game of economical dominance.

The way it looks like, doesn't matter what Binance will do in terms of compliance. They'll always find a way to hit them.

Regardless of the political goals behind what is happening, it cannot be denied that Binance has made a fatal mistake if the allegations are proven.
America may not be able to stop Binance activity in its allied countries, given that Binance has become a global monopol (after the fall of the Ftx stock exchange), but it may deprive it of activity in the American market, and it is not excluded that binance.us will be completely stopped, or at least strict monitoring measures will be imposed on it.

[zasad@]

Regardless of the political goals behind what is happening, it cannot be denied that Binance has made a fatal mistake if the allegations are proven.
America may not be able to stop Binance activity in its allied countries, given that Binance has become a global monopol (after the fall of the Ftx stock exchange), but it may deprive it of activity in the American market, and it is not excluded that binance.us will be completely stopped, or at least strict monitoring measures will be imposed on it.

I studied the allegations. The exchange is accused of all mortal sins, up to the financing of terrorist organizations. This is no longer a violation of the rules of trade, for which a fine is due.
The implications for Binance, its subsidiaries and CZ are severe. All companies that work with them are at risk of falling under sanctions and criminal prosecution.
What are the conclusions from this against the backdrop of the bankruptcy of large banks working with cryptocurrency projects? The regulator closes the gateways for exchanging cryptocurrencies for money.
It is likely that the regulator also has similar charges against other exchanges, but they have not yet been presented.

[safar1980]

Binance, CZ, and NBA star Jimmy Butler and other crypto influencers hit with $1B suit for promoting unregistered securities
Just four days after the Commodity Futures Trading Commission brought a highly-publicized suit against Binance, the world’s largest cryptocurrency exchange is facing another high-profile legal challenge.
Late on the evening of March 31, the Moskowitz Law Firm and Boies Schiller Flexner, home to super-attorney David Boies, filed a class action suit that targets Binance, its founder Changpeng Zhao (CZ)—the world’s leading spokesman for the crypto industry—and hoops star Jimmy Butler of the Miami Heat.

[zasad@]

https://cointelegraph.com/news/jane-street-tower-research-and-radix-are-binance-s-vip-clients-in-cftc-suit-report
"Trading firms Jane Street Group, Tower Research Capital and Radix Trading have been reportedly identified as Binance’s three “VIP” clients that were anonymously cited in the recent lawsuit filed against Binance by the United States commodities regulator.

According to an April 5 Bloomberg report citing “people familiar with the matter,” Radix Trading is “Trading Firm A” as described in the Commodities Futures Trading Commission’s (CFTC) suit, while Jane Street was “Trading Firm B” and Tower Research was “Trading Firm C.”

The firms on the CFTC’s list were examples of U.S. clients allegedly able to access Binance.
It was part of a strategy that “actively facilitated violations of U.S. law” by helping U.S. trading firms evade Know Your Customer compliance standards, among other things, the CFTC alleged.

Binance allegedly enabled Radix to sidestep compliance controls by providing them information on accessing Binance.com through a virtual private network to obscure its IP address."

[safar1980]

MR Binance Australia Derivatives AFS licence cancelled

with effect from 14 April 2023, clients will not be able to increase derivatives positions or open new positions with Binance;
Binance will require clients to close any existing derivative positions before 21 April 2023;
on 21 April 2023, Binance will close any remaining open positions.