Billionaire businessman and owner of the Dallas Mavericks, Mark Cuban, has issued a statement criticizing the US Securities and Exchange Commission (SEC) for suing Binance and Coinbase, two of the world's largest crypto exchanges, for their trading practices.
On June 5, the SEC filed a complaint against Binance, its founder Changpeng Zhao, and its US subsidiary, BAM Trading, accusing them of operating unregistered securities exchanges and selling digital assets that must be registered. The next day, the SEC sued Coinbase, a public company listed on the Nasdaq, for similar violations.
Cuban, who is a clear crypto supporter and invests in various crypto projects, said the SEC's actions are unfair and harmful to small businesses and startups in the crypto space.
He argued that the SEC's rules for registering digital assets were outdated and impractical, and that the agency needed to make it easier and cheaper for crypto companies to adapt.
In his statement, Cuban quoted former SEC chairman Jay Clayton, who said in an interview that whether a digital asset is a security depends on its current usefulness versus its future usefulness. Clayton used Broadway tickets as an example: "If someone bought 1,000 tickets for $10 and told friends and family they could sell them for $100 or $1,000, then that's a security. But if they bought the ticket 10 years later, it's just a ticket."
Cuban said that logic was flawed and put the SEC on the target board. According to Clayton's logic, anyone who buys and sells Broadway tickets would first have to register them with the SEC, which would be costly and time-consuming, he said. He said this is a similar situation to what crypto startups face when trying to register their tokens with the SEC.
Former @SEC_Enforcement head Jay Clayton unknowingly threw the SEC UNDER THE BUS and explained why the SEC needs to change the registration rules for digital assets like crypto.
Here is what he said
“So what could cause that shift? Present utility versus future utility,… https://t.co/8oUE4Q69wo pic.twitter.com/AeAgoJimg4
— Mark Cuban (@mcuban) June 17, 2023
Cuban said that most crypto companies start small and are not against registering with the SEC, but they do not have clear or easy guidelines to follow. He said someone he worked with called the SEC and asked them how to register a token, but was told to hire a securities attorney for help.
Cuban said it's not a crypto issue, it's a matter of SEC principles. He noted that if the SEC really wanted to protect investors, it needed to simplify its rules and make it convenient for new companies to be formed. He questioned why states and other agencies such as the IRS can do this, while the SEC cannot.
*Not investment advice.
