Hating Coinbase/Binance and Praising SEC

I see so many posts condemning companies like Binance or Coinbase for shoddy business practices and cheering on the SEC for going after them, that I wonder if some of them are generated by bots.

I get that these exchanges are providing platforms for exchanging what many of us think are scam coins. I also get that some exchanges have engaged in shady business practices like using their clients’ funds as collateral for loans. And some (but not all) altcoins truly are scammy and designed to enrich their founders at the expense of whoever they can sucker into coming along for the ride.

Truly deceptive practices can be discovered by audits or minimized by an internal control audit by private accounting firms without involving the SEC, and in fact the SEC often gets involved and takes credit (as well as fines) for punishing these firms after the money has already been lost and the problems have already been discovered through other means. One of the shoddiest practices, IMO, is when companies use KYC requirements to hold a customer’s funds hostage while he jumps through hoops trying to satisfy their never-ending quest for more documentation. This is not a problem that SEC seems at all concerned about.

Sometimes the SEC claims that it wants to protect the public, but increasingly, it doesn’t even feel like it needs to justify its enforcement actions. It simply goes after a company that is a convenient target for them, without regard for how ethically it is operating, because in its (very biased) opinion the company is violating some very technical provision of the law, regardless of whether that company is actually providing a very valuable service to its customers, who do not believe they are being victimized by the exchange. It’s much more likely that they [the SEC] are just trying to increase their own power and influence while making it more difficult for crypto currencies (including Bitcoin) to compete with the government’s unchecked control over the monetary system.

The costs of defending against an SEC enforcement action can run into hundreds of millions of dollars. SEC’s legal expenses are either underwritten by taxpayers or subsidized from fines from companies who decide it’s cheaper to pay them off than to fight against them in court. OTOH, the exchange’s legal fees have to be borne by its investors or by their customers. And never mind, concepts like jurisdiction. U.S. regulatory agencies have arrogated to themselves the power to go after any company in the world using the flimsiest of justifications.

Like it or not, legally speaking and in the minds of most people outside this forum, Bitcoin is usually classified as a crypto asset. The SEC may be targeting altcoins for now, but whatever success they have in going after altcoins, can be leveraged to come after Bitcoin too. The market seems to realize this. Of course, I know that there is no CEO of Bitcoin to go after, but that doesn’t mean there aren’t plenty of things they can do to discourage people from using Bitcoin.

Tldr: The SEC is much more of an enemy than a company like Binance or Coinbase that merely provides services to voluntary customers.