• A staffer from U.S. Senator Cynthia Lummis’ (R-Wy) office has stated that every crypto exchange in the US including the largest in the world, Binance, is being investigated.

• An undisclosed senior executive at a large cryptocurrency exchange has hinted that many US exchanges more likely received Wells Notices.

US lawmaker Brad Sherman recently questioned the lack of action from the US Securities and Exchange Commission (SEC) against the so-called “big fish” exchanges. In recent bill proposals, the US Commodity Futures Trading Commission (CFTC) has been considered to take charge of crypto oversight ahead of the SEC. 

In response to the many criticisms regarding how the authorities reluctantly take on trading platforms in the US, a staffer from U.S. Senator Cynthia Lummis’ (R-Wy) office has disclosed that every crypto exchange in the US including the largest in the world, Binance, are being investigated. This means the investigation of the $20 billion crypto exchange Coinbase is just one of the many on their desk. It is important to note that there are over 40 crypto exchanges in the US according to the crypto data site, CoinGecko.

An undisclosed senior executive at a large cryptocurrency exchange has hinted that many US exchanges more likely received Wells Notices. This is based on chatters he is hearing from the members of the SEC. This is usually brought to inform the company that an action is about to be brought against them. The executive further explained that this is different from the standard procedure the SEC usually conducts. 

Congress likely to side with CFTC if SEC does not resolve the issue internally

The SEC and the CFTC have over the years attempted to take control of crypto jurisdiction. While the SEC believes that most cryptos are securities, some lawmakers regard digital assets as commodities and have considered the CFTC to officiate it. The staffer also disclosed that the SEC desperately wants to resolve its dispute with the CFTC over the crypto jurisdiction.

According to the staffer, it is appropriate for the SEC to resolve the issue internally before the legislators get involved. If this happens, Congress would most likely take the side of the CFTC. This week, “U.S. Senators Debbie Stabenow (D-MI), Chairwoman of the Senate Committee on Agriculture, Nutrition, and Forestry, and ranking member John Boozman (R-AR),” proposed the Digital Commodities Consumer Protection Act of 2022 to empower the CFTC to officiate digital commodities.

The CFTC has long declared its jurisdiction over cryptos since 2014. During that time, cryptos were popularly known as virtual currencies. According to the Agency, the Federal Court permitted it to prosecute fraud cases involving virtual currencies in 2018. Over the years, the SEC has also acknowledged on multiple occasions that Bitcoin is a commodity. It can be recalled that SEC director William Hinman stated in a speech in June 2018 that he did not think Ethereum was a security. This means he understood that the asset falls under the jurisdiction of CFTC. 

Gary Gensler, the SEC chairman has, however, stated that Ethereum could be a security, however, it was not included in the nine assets SEC listed as securities in its insider trading allegation against a former Coinbase employee. It can also be noted that the SEC stated that all of those assets were created on the Ethereum blockchain.