SEC/CFTC Enforcement Action Anticipated Within a Week

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  • Prominent crypto lawyer Jake Chervinsky has warned over SEC/CFTC action next week
  • Chervinsky says the agencies typically take action when their fiscal year ends on September 30
  • Tether and Binance could be among the targets this time round

Enforcement action targeting crypto companies could be likely within the next six days according to a prominent cryptocurrency lawyer. Jake Chervinsky, who headed attempts to tackle the potential damage done by the Infrastructure Bill last month, tweeted that both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) will see their fiscal years ending on September 30, which has historically tied in with “enforcement activity” being taken against crypto entities. Past action at this time of year has targeted EOS and BitMEX, and there are a couple of candidates that stand out as being potential targets this year.

Recent History Bears Out October SEC/CFTC Enforcement Action

Chervinsky’s tweet pointed to events that have taken place around September 30 in the past two years as evidence to back up his claim that the CFTC and SEC tend to take action around this time in the year “as both seek to bolster their performance reports & budget requests”.

Recent history does indeed bear his theory out, with BitMEX being hit by CFTC charges on October 1, 2020, and being hit with a $24 million fine for their illegal ICO on the same date exactly the year before. In BitMEX’s case they knew they were under investigation, but had no inkling of what was coming.

Tether Under the Microscope?

Attention then turns to 2021 and which companies might be under the microscope this time round, assuming history repeats itself. Coinbase has of course done its best to piss off the SEC by going public with its disdain over the way it treated the company throughout the Coinbase Lend saga, but Coinbase is a regulated company with government contracts, so it is unlikely that they have done enough wrong to warrant such action.

In our opinion there are two entities that the SEC and CFTC could come after in a week’s time – Tether and Binance. Tether famously settled with the Office of the New York Attorney General earlier this year over its loan to Bitfinex, but it has since revealed that just a fraction of its vast market cap is actually based in cash. Could it be that the CFTC/SEC has a file on Tether that they are waiting to unleash, knowing it would (temporarily) wreak havoc in the crypto markets?

Binance a More Likely Target

The other option, and the more likely one in our opinion, is Binance. Binance has been the target of several regulators’ ire this year, with talk of a probe by the CFTC (similar to BitMEX) emerging in March, so it would hardly be a surprise if they levelled formal charges against the exchange next week. The effect would be equally as detrimental, although what action the agencies could actually take remains to be seen, given Binance’s lack of presence in the U.S.

All up however, it seems that something will come next week, we just don’t know what it will be. Hold on to your hats…