Gemini Exchange Accepted By Regulators, Pressure Grows On Binance
As financial regulators have Binance under magnifying glass, Cameron Winklevoss takes the opportunity to remind everyone, Gemini, which he co-founded in 2015 with his twin brother Tyler, is fully regulated to operate in the U.S, including in New York.
Gemini Exchange has always marketed itself as an above-board, regulated exchange that works closely with regulators. As the net is closing in on fast moving Binance, Winklevoss said:
“We’re playing the long game. We’re trying to be the fastest tortoise in the race. The long game pays off over time.”
With talks of class action lawsuits against Binance, the world’s largest exchange by trading volume may soon find itself in a lot of trouble.
Global Regulators Turning the Heat on Binance
In just few weeks, a total of six global regulators have sounded the alarm on Binance.
Similarly, Thailand’s Securities and Exchange Commission filed a criminal complaint on the grounds Binance is operating a crypto exchange without a license. Thai police are said to be involved with the notice.
The upshot to this has seen partner firms cut ties with Binance, leading to problems for U.K and European customers ramping on and off the exchange.
Joining in on the witch hunt, U.K banks have stopped payments to crypto businesses, with several specifically mentioning Binance. The list includes Santander, Barclays, Monza, TSB, Nat West, Metro Bank, HSBC, and Lloyds.
The Snowball Effect
According to The Verge, May’s crypto crash did more than inject FUD into the markets. On May 19, as Bitcoin and the rest of the markets crashed, Binance users were locked out of their accounts and were unable to exit positions.
This outage has united affected users who intend to bring legal action against Binance. But as Binance has no official headquarters, users are at a loss on where to send the paperwork.
“There are apparently two groups trying to figure out how to sue this company, one in France working with 700 people and one in Italy.”
As well as that, the May 19 crash also showed flaws in Binance Leveraged Tokens (BLVTs). This derivative product gives leveraged exposure to crypto-assets. It differs from margin trading in that users can get leveraged exposure but without putting up collateral or being liquidated when the trade goes too far the other way.
However, BLVTs, can, of course, lose value.
The May 19 crash saw several BLVTs act inconsistently to how they were supposed to. For example, LTCDOWN should have spiked higher in price as the markets crashed. But it fell along with Litecoin, leading to unfair losses.
Victims have labeled BLVTs as defective derivative products. Like the locked-out users, they also seek some form of redress from Binance.
Binance CEO Changpeng Zhao recently issued a letter admitting mistakes have been made. He attributes this to the speed at which the platform has grown.
“As a four-year-old startup, Binance still has a lot of room to grow. Binance has grown very quickly and we haven’t always got everything exactly right, but we are learning and improving every day. We hope to clarify and reiterate our commitment to partner with regulators, and that we are proactively hiring more talent, putting in place more systems and processes to protect our users.”
Although the letter didn’t address any specific case, Zhao said he and his firm are committed to protecting users. But it will take time to get things right.
