SEC’s Gensler claims ‘parallels’ between Binance and FTX, yet one wasn’t sued

SEC’s Gensler claims ‘parallels’ between Binance and FTX, yet one wasn’t sued

The United States Securities and Exchange Commission’s chair has hinted at “parallels” between crypto exchange Binance and defunct exchange FTX, specifically their alleged use of sister entities to shift cash.

SEC’s Gary Gensler speaking with Bloomberg’s David Westin. Source: Bloomberg

In an interview with Bloomberg on June 6, U.S. Securities and Exchange Commission Chair Gary Gensler mentioned FTX’s alleged fraud and manipulation involving its sister firm Alameda Research, as well as the claimed role played by its founder Sam Bankman-Fried in it.

“There’s a business model that bundles and commingles functions that we don’t see, nor would we allow elsewhere, in finance,” he explained.
The SEC filed a lawsuit against Binance on June 5, alleging a total of 13 allegations. According to one of the charges in the lawsuit, monies from Binance and Binance.US were mixed into an account held by the Changpeng Zhao-affiliated Merit Peak Limited.

Another argument is that Binance.US engaged in wash trading through its “primary undisclosed’market making’ trading firm Sigma Chain,” which Zhao owns.
“Platform after platform, entrepreneurs are trying to build wealth for themselves and their investors through sister organisations — hedge funds — trading against the customers,” Gensler explained.

Read Also: Binance provider in Brazil gets payment institution approval

So, where is the FTX suit?
The recent interview is expected to feed the existing Twitter argument – why hasn’t the SEC sued FTX?

Ripple CEO Brad Garlinghouse claimed in a June 6 tweet that the recent series of litigation is an attempt by the SEC to “distract” from the agency’s “FTX debacle.”
Others speculated that FTX’s large donations to political parties, as well as Bankman-Fried’s previous lobbying in Washington, D.C., could be factors.
Meanwhile, Markus Thielen, Matrixport’s head of research and strategy and author of Crypto Titans, had a contrasting perspective. He told Cointelegraph that prior to FTX, crypto was not viewed as a big threat to US financial stability.

Read Also: Binance Sees Largest Bitcoin Withdrawal In Its History, BTC Rally Set To Benefit

The failure of three large banks this year has demonstrated differently, he claims.
“It wasn’t a priority to fix or stop the crypto rails at first,” Thielen explained. “People realised that after FTX, it’s really in the billions of dollars.”
Thielen also believes that there is a sense of “embarrassment” for people who did not anticipate the problems at FTX, especially MPs.
Binance is related.US insists customer funds’remain safe’ despite SEC request to freeze assets
“You could argue that those people are a little embarrassed, so they have to work twice as hard to distance themselves from it.”
While the SEC has not announced a lawsuit against the FTX exchange, the regulator has filed accusations against its founders and former executives.

Former FTX CEO Sam Bankman-Fried, former Alameda Research CEO Caroline Ellison, former FTX co-founder Gary Wang, and former FTX Director of Engineering Nishad Singh are among those involved.

The SEC did not respond.

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