70. EMERGENCY POD: SEC Sues Binance: What It Means For You.

Welcome back to another episode of the Benneberg show with your favorite MBA and high school dropout talking everything crypto, business and personal growth. And today we're talking an emergency. Podbergs. Binance has been sued by the SEC. In 130 page report they have ripped apart a range of different things with Binance, with the assets they've been selling on the platform.

And accusing them of violating a number of US laws. Now the market has reacted pretty quickly. Bitcoin's down around 25 and a half thousand, Ethereum's down 6 or 7%. There's a little bit of panic in the market. So we're going to give you what on earth is going on, what the SSE is saying, what the bot finance have potentially done, where to from here and how we are playing the markets. Bergs, good morning, welcome back. What news to come back to?

Man mate. Absolutely crazy. It was a public holiday in wa. Come back to this. Never a dull day in crypto, mate.

Always spicy, Always spicy mate. And what we want to just debunk today I guess is really what it means for you as an investor.

So.

To be honest, I sort of tweeted this morning and I was like, you know, really this was kind of going to come at some point in time. We know that the SEC is taking a very harsh aim at crypto in general. It seems as though like Binance are just in the firing line of the SEC Coinbase Realistic company on the nasdaq they are like basically treated like a bank. They have a lot of reporting and auditing done. So they're very clean. Where Binance has historically been very gray, they have never really had a hq. CZ has always sort of said that he, you know, doesn't really have a location, there's no headquarters, they're not really regulated anywhere. And it seems that the SEC have been planning this for a little while. So there's 136 page complaint that you can read if you want. Our analysts have dived into a lot of this this morning and given us and our members a deep dive today which we're going to share with you. So really what has happened is that the sec, the regulator over in the US alleging that Binance has been running as an unregistered exchange offering unregistered securities and misrepresenting trading controls. Now the lawsuit comes around 10 weeks after the CFTC charged three of Binance's many corporate entities and its CEO for violating several US laws. And after this, the head of Binance tweeted that they are prepared to fight it to the full extent of the law and they would defend their platform vigorously. Now, off the back of that, prices have obviously tumbled. Bitcoin's down about 6 or 7%, Ethereum about 4 or 5%. And notably the SEC have also mentioned an alleged. Sorry, yeah, alleged that some of the assets they've been selling on the exchange have also been securities which include bnb, Busd, also a Stablecoin, which is kind of interesting. Solana, Ada, Matic, filecoin, Atom, Sandbox, Mana, Algo, Axio, Infinity and Coty. There's a range of different assets there that they're saying that were sold as securities now. Yeah, it's an interesting one because this is, you know, not only big for the market in terms of where this goes from a security perspective, but obviously there's also some stuff going on here around the co mingling of funds and potentially Binance using, you know, their assets and customer funds in ways they shouldn't do. Like there's a lot of allegations here. It's very early days, but it's an interesting point in the market.

Absolutely right. And let's be clear here. The SEC is going after crypto as a whole. They're not specifically, they have specifically gone after Binance and of course cz, but the way they've written this and the things they're talking about, they're going after things that could be securities the way that Binance is actually operating. And if you think about it, if you want to go after crypto in the States, you're going to go after the largest exchange. You're not going to go after Coinbase because they're quite heavily regulated, they're a listed company. You're going to go after the one that's actually, well, Binance is larger. They're going to go after that and really they put the hammer down on this poor guy. And the way it's actually written is very extreme and it's just, man, the spiciest thing to wake up to.

So I tweeted this morning what we are seeing with the SEC is a pure attack on freedom versus authoritarian controls. The government, banks and institutions don't want crypto. It takes away their control. It seems this is all agenda based to get a CBDC controlled world where banks and governments see everything we do. Nothing really new here for me. Could be a choppy few months, but we push on. Now when I originally tweeted that you, you know, I, I hadn't seen the part of this filing around the comingly of funds and what, you know, Binance has been doing with the money. That's pure allegation for me at this point. We don't know if that's true. No idea if it's true. One thing that does remain true though, as we've been saying for a long time at Collective Shifting on this podcast, is that if you have money on an exchange, you need to get it to a wallet. Regardless if it's Binance or not. It doesn't matter. Get your crypto off exchanges yesterday. But for me, bergs like the SEC and Gary Gensler have had a clear line of sight for crypto companies. They don't like crypto. They don't like that they're losing control. The idea of crypto is something they don't like. They have not been clear with the rules and regulations. It continues to be gray and they just keep slapping down these things. And we've seen this across the board, like even Elizabeth Warren creating this like anti crypto army. You know, the SEC tweeted this morning with like a little graphic, you know, highlighting one comment from Binance made a little while ago around like, we are operating sort of quote unquote from Binance's chief compliance officer. We are operating as a effing unlicensed security exchange, bro. Or in the usa, bro. It's just like I feel as though they're really trying to create this narrative around why crypto is really bad. We even saw Senator Warren come out and say, why then we need to ban crypto because it fuels fentanyl purchases. It's like it is being proven that the percentage of crypto transactions for, you know, on the black market is less than 1%. Fiat currency is used for that all the time.

Yeah.

Picking out a small section of this industry and making it that, you know, talking about how it's the worst thing ever is a complete misrepresentation.

And it's wild that the SEC would use that quote. You know, the effing a license exchange, bro. Like they're really trying to paint a picture here. And the thing is, if you're buying something, why would you want that? Whereas traced on a digital ledger, you use cash like everyone knows you use cash if you don't want to be traced. And then on top of this, the whole SEC's job is to protect customers and ensure regulation. None of this is really being done to protect customers. What it is is going after crypto. It's causing panic, it's going to cause chaos and it's going to make people want to get their funds off an exchange, which can then potentially cause trouble for the exchange. The accusations are from all the way from, you know, securities as being unlicensed to commingling to hypothecation. It's the full gamut. And it's like if you want to put the brakes on a company, this is the way to go about it.

Yeah, 100%. So a couple of key takeaways here. One is get your crypto off exchanges, no matter what exchange it is, get it to a ledger or a Trezor. And number two is I guess, how we're going to play this market. So as we mentioned, that lawsuit probably isn't surprising off the back of recent charges that were laid against Binance. But our long term outlook hasn't changed. I also tweeted this morning that Bitcoin is unfazed by this. Bitcoin continues to do the same thing it has done for the last 12 years. Day in, day out, it does the same thing. What we will see however, is I think, very choppy little period of time. Burgs while markets don't like uncertainty and this is definitely uncertain. So I think prices can continue to fall further and I think, you know, might give us a good opportunity to start to, you know, really continue to get more of these lower priced assets, you know, moving forward four or five years. I think looking back at this, like we always say, like this is just going to be another blip on the radar. If anything, it hopefully gives us some more clarity on what's going on with now coinbase in a lawsuit and Binance in a lawsuit. I feel as though we're going to get, you know, a little bit more clarity on securities and how exchanges should be running and operating, which is for the better in saying that if the worst case scenario sort of hits and Binance have been found to do something FTX like, I think that could be pretty, pretty bearish. And in that circumstance we could see Bitcoin fall sub 20,000 back towards where our lows were late last year.

And could really set in a bit of a crypto winter. I don't think that is likely. But you know, at this point in time we need to wait and see how it unfolds to see what the data plays out in terms of what they actually have been doing.

Exactly right. And if I'm a person and I have a substantial amount on Binance I would be considering or any exchange, let's just not say Binance. Any exchange I would be considering the Risk of ruin. What is the risk of ruin to me? If I log in one day and my funds aren't there or I can't access them, is that risk too high for me? Okay, I need to look into self custody and then weigh up your options. There's and on the Collective Shift website we've got free tutorials that explain how to do all of those options. And I think for now the way things generally work is, you know, you get regulation or you get law. It's, you know, ascended. It's everyone understands it and then you get case law. So where it's in the gray area or you know, someone wants to challenge something, it goes through case law and then that then builds and the law kind of know molds over time. You have precedent and that's how you get to a good area where people generally understand what's going on. This is the kind of starting point of that for that regulatory, regulatory clarity that we would all like to see in the future.

Yeah, Spartanburgs. I also want to talk. Just read through a tweet. I read this one from Charles Hoskinson. Charles, he is the founder of Cardano and whether you like him or not, or the project or not, I actually respect some of his comments and I liked his tweet this morning when I read it out. With respect to Binance, I'm reading through the SEC complaint. It's over 130 pages, but seems like the next in a series of attempts to implement choke point 2.0 in the United States. The end goal is an agenda based CBDC partnered with a handful of massive banks and end to end control over every aspect of your financial life. A regulatory event is where you have a debate about compliance with a law or guidance. This event seems to be a political, philanthropical disagreement with the every existence of cryptocurrencies and what they represent. An unelected group of people have decided that concepts like self sovereign identity, owning your wallet and freedom to control your economic agency should be removed from the masses and given to the enlightened few. Honestly, what is happening isn't anything new. It's always the same fight between freedom and authoritarianism, just with different players, technology and words. It does seem like this in this event is a perfect opportunity for the entire industry to set aside its fragmented nature and unite for a common sense set of rules and guidelines that can prevent the United States from slipping into a dystopia that would make 1984 look like a vacation. I have some more to say later, but we'll close with. We are going to be fine. Everything's all right and the future is bright for this industry. Oh, that's really well said.

That is beautiful. And we need to keep in our minds that Binance is a global company. This is just binance USA. The USA isn't the entire world. Right. It's like whatever, 300 million people. There's 8 billion people in this world. Yet we focus on the US and we look to the US for a lot of guidance and precedence. We have to remember that even if something happens in the States, this is a large global company. It will still function, it will still operate.

Yeah. Back on. So key takeaways. Get your money off exchanges, prices to move lower, get your bags ready, be opportunistic, everything will be okay. We'll ride it out. And let's just hope that CZ has done the right thing.

Absolutely. I'm looking to some tasty discounts, mate, leading up to the hardening. I can't wait.

Thank you everyone for tuning in. If you like this episode, we'd love for you to share it with a friend. This is our little emergency podcast. We'll be uploading day of recording Tuesday 6th of June. Thank you so much for listening as always. If you like these episodes, you can check us out on all platforms. Ben and Bergs. We upload three episodes a week and we'll see you next time.

Thanks, Javiers.