The Truth About the Crypto Crackdown

Andy Snyder|June 8, 2023

Play stupid games… win stupid prizes.

That’s the lesson the crypto crowd is pondering this week as the SEC continues its heavy-handed crackdown.

Wall Street’s ankle-biting watchdog sued leading crypto exchange Binance on Tuesday, accusing it of “blatant disregard for the federal securities law.”

Anybody who didn’t see this coming needs to have their eyes checked… The cataract of ignorance is obscuring the obvious. Disregarding securities law has been Binance’s modus operandi since it first entered the world of decentralized assets.

It played a stupid game… and it won a stupid prize.

Six years ago, we said this would happen. We ruffled plenty of feathers when we said the boys in charge would never let the unregulated crypto trade go on. Incredibly, it’s taken the feds more than half a decade to get even this far.

This is why we’ve been able to talk out of both sides of our mouth for the last several years. At once, we could point out the fallacies of the crypto market… and note the massive speculative opportunity within it.

At once, we could say all the good crypto assets would be forced to register as securities… while also telling our dear subscribers to take advantage of the frenzy being fueled by artificially low interest rates.

Despite the dire reporting this week… that frenzy remains alive today.

What gives?

How is it that Bitcoin managed to climb on the Binance news? How is it that midsize token Stacks climbed 16%, putting it up more than 200% so far this year? And how is it that Manward Letter holding Monero remains up more than 50%?

Aren’t the gatekeepers shutting all this down?

Stupid Prizes

The government is the king of stupid prizes. It’s been stumbling around the crypto sector for a decade, too confused, too lazy and too timid to draw any conclusions. It’s created a speculative whirlpool.

For the uninitiated, it’s dangerous. They jump in at all the wrong times.

But for the folks tracking the news, following the buying volume and skillfully trading the action, few corners of the market produce such profit-inducing moves.

This latest regulatory move, for instance, puts an intense spotlight on a corner of the digital market we’ve been shouting about for over a year. Read past the headlines, and you’ll see the SEC is accusing Binance of running an illegal securities exchange. That’s because many of the assets on its platform… are securities.

Binance and other platforms like it have cut corners and failed to register as licensed dealers.

It’s like selling weed. It’s fine if you stand in line, pay the government’s bureaucrats and send them a fat check each quarter. But stand on the corner and sell the same product without filling out that coveted paperwork… and, oh boy, the boys in body armor are gonna Tase you.

The SEC merely wants Binance and its brethren to register, fill out the right paperwork and pay the proper fees. It may be an idea baked into a cake of ignorance, but it’s the law of the land.

Seeing all this coming, we’ve been telling our readers about the companies that followed the rules and got the SEC’s blessing to sell these securities. If you’re paying attention, you realize it’s not the cryptos themselves that the government is going after. Uncle Sam hasn’t said much at all about them (that’s why so many continue to rise in value). Instead, it simply wants anybody selling a security to be a licensed security dealer.

Fair enough. Too bad the headlines don’t bother to clarify that.

We’ve taken advantage of all this by owning the leaders in the nascent security token market. It’s home to the exchanges that get more and more valuable each time the government cracks down on regulatory scofflaws. It’s the industry that has filled out the paperwork and has the oh-so-powerful blessing of Uncle Sam.

And, best of all, it’s not going away. News like we’ve seen this week only makes security tokens that much more appealing… and that much more important to the crypto industry.

For the folks who dare to read only the headlines, this week’s news isn’t great. But the folks who’ve paid attention and done their homework know it’s been a long time coming.

We’re just surprised it took this long.