SEC Sues Binance, Coinbase Then BlackRock Files For Bitcoin Spot ETF; Is This An Inside Job?

While the cryptocurrency community is excited about the BlackRock Bitcoin exchange-traded fund (ETF) filing and the planned involvement of other prominent players in traditional finance, such as Fidelity and Deutsche Bank, one observer is skeptical.

On Twitter, he notes that these Wall Street giants only became involved after the United States Securities and Exchange Commission (SEC) took legal action against Binance, the world’s largest cryptocurrency exchange, and Coinbase, a popular exchange in the United States and Western Europe.

Is This An Inside Job?

He claimed that the SEC could have colluded with specific players to provide them additional time to catch up. This statement has sparked considerable speculation within the industry. However, there is no evidence to suggest that government regulators, such as the Commodity Futures Trading Commission (CFTC), who have filed a lawsuit against Binance, have purposely targeted top cryptocurrency platforms in the United States to enable Wall Street firms to dominate the market.

On June 5, the SEC sued Binance, alleging that the exchange was engaged in several illegal activities, including operating an unregistered securities exchange, failing to register as a broker-dealer, and misleading investors about its operations. They also claimed that some of the assets listed by the crypto trading platforms were unregistered securities.

The SEC leveled 13 charges against Binance, Changpeng Zhao, the exchange’s CEO, and Binance.US. However, Binance has said it will defend itself against the lawsuit.

While the lawsuit is pending in a federal court, the SEC dropped its request for a temporary restraining order (TRO) against Binance.US on June 17, 2023. It means Binance.US clients are free to access their funds while also showing that the SEC could, after all, be willing to work with cryptocurrency exchanges. 

BlackRock Bitcoin Spot ETF Filing Good For Grayscale?

Notably, the TRO was less than two days when BlackRock, the world’s largest asset manager, with over $9 trillion in assets under management, applied for a Bitcoin Spot ETF on June 19. Their decision to file effectively legitimizes Bitcoin as an investment asset. If approved by the SEC, it will provide an avenue for institutional investors to get exposure to Bitcoin. 

Following BlackRock’s Bitcoin spot ETF application, Grayscale’s Bitcoin Trust (GBTC) soared over 12%. At the same time, the discount, which is the difference between GBTC share price and net asset value (NAV) of Grayscale’s Bitcoin holdings, has been decreasing. After the discount fell to 44% on June 14, this value now stands at 36.6%, trackers on June 20 show.

It remains to be seen whether the SEC will approve the first Bitcoin spot ETF in the country, following Canada, which approved the Purpose Bitcoin ETF in February 2021. In the meantime, Bitcoin prices are reaping higher, soaring 13% in 5 days.

In that sense, the Grayscale Bitcoin Trust discount could continue to decrease. This outcome might be the first positive development for the cryptocurrency and the nascent industry.