USDT TRX BNB LINK? Who is the next unlucky person under the iron fist of US regulation?

As US compliance agencies have become the driving force of this bull market, the US government has become the biggest variable in the global cryptocurrency field. After the successive punishments on EOS, Libra, Telegram, BitMEX, and XRP, who will be the next "unlucky guy"? New rumors emerge every day.

Among them, USDT has always been the well-known number one target. It has been fighting wits and courage with US regulators for many years, but stablecoins are not subject to the most fierce SEC securities jurisdiction; the SEC started tracking BNB in ​​July last year, but no follow-up progress has been disclosed for the time being, and Binance has a positive attitude towards supervision; LINK was the first to spread rumors after the XRP incident, but some people believe that it was malicious speculation by short sellers; TRON was previously investigated by the US media, and public opinion was also in an uproar on January 5. In short, these four projects are the most concerned in the "iron fist" speculation of public opinion.

The impact of the crackdown on XRP by US regulators is beyond imagination. In December 2020, the US Securities and Exchange Commission (SEC) filed a lawsuit against Ripple and its two executives, accusing them of raising more than $1.3 billion through unregistered securities and manipulating market prices to sell high and buy low. Subsequently, more than 60 mainstream exchanges such as Coinbase delisted XRP, and the price of the currency fell by more than 60% in the past 30 days. The latest news shows that Grayscale has sold all its XRP holdings and removed them from its investment portfolio.

In October 2020, the U.S. Commodity Futures Trading Commission (CFTC) sued BitMEX, the world's largest derivatives exchange, and BitMEX executives were subsequently arrested in the United States. Currently, BitMEX's contract trading volume has been surpassed by the four major Chinese contract exchanges. Earlier, the U.S. regulators cracked down on Libra and Telegram, resulting in the suspension of their coin issuance plans. EOS ended well, ending the SEC investigation with a fine of $24 million, which is a drop in the bucket compared to the billions of dollars worth of Bitcoin it raised.

As mentioned earlier, since this round of bull market is largely due to purchases by U.S. compliance institutions, these institutions are very sensitive to U.S. government regulation. Therefore, after the SEC punished Ripple, decentralized and centralized cryptocurrencies formed a sharp contrast in rise and fall, and leading decentralized cryptocurrencies such as Bitcoin/ETH also led the rise.

There has been a lot of discussion in all circles about which project may be punished by US regulators, especially the SEC, and various rumors have been circulating for a while. A big V proposed the hypothesis in the screenshot below. On January 5, Justin Sun’s Tron also caused a lot of controversy. Adam Cochran, partner of Cinneamhain Ventures, believed that Tron had been investigated by the US SEC, but Justin Sun refuted that he had not received any regulatory notices from China or the United States.

The core criterion of the SEC's judgment is whether the project is a security. The test standard is the classic Howey test, which includes that investors need to invest funds or other resources; investors' funds, services or items are centrally invested in common projects under the control of investment sponsors; investors expect investment projects to bring profitable returns, and investors also need to bear the risk of capital loss; investors' returns are only earned by investment sponsors or third parties unrelated to investors; generally speaking, investors do not participate in the actual operation of the project, and the success of the project has nothing to do with investors. The most critical thing is that investors expect investment projects to bring profitable returns. Refer to "Legal Regulatory Path for Non-Sovereign Digital Currency in the United States"

But according to this standard, the SEC can crack down on almost all cryptocurrency projects. So what are the core criteria for it (and other regulatory agencies) to select projects to crack down on? Based on past experience, there are four points:

1. The higher the degree of centralization, the easier it is to be attacked; for example, XRP.

2. The greater the influence and popularity of a project, the more vulnerable it is to attack; for example, Libra.

3. The higher the fundraising amount, the easier it is to be hit; for example, EOS and TELEGRAM, which are the first in history.

4. The more resistant you are to regulation, the more likely you are to be hit; for example, BitMEX.

The four most core currencies among the many skeptical voices are: USDT, TRX, BNB, and LINK.

In terms of centralization, USDT is the highest, followed by BNB, TRX, and LINK; in terms of project influence, USDT is the highest, followed by BNB, TRX, and LINK; in terms of fundraising amount, BNB raised 15 million US dollars in 2017; LINK raised 32 million US dollars in 2017; TRON raised about 4,000 bitcoins. Because they were raised relatively early and the fundraising amount was not high, they can be ignored to a certain extent.

Among them, USDT has been fighting wits and courage with the US government for many years, while USDC, BUSD, etc. have become one of the cryptocurrencies with the fastest market value growth in 2020 because of their compliance stablecoin route. Boiling 2020: Trend analysis of the top 30 cryptocurrencies, the emerging and the laggards are.

USDT is special. According to the Howey test, stablecoins are difficult to be classified as securities. They are regulated by the Financial Crimes Enforcement Network (FinCEN) under the U.S. Treasury Department, rather than the most stringent SEC. This has helped USDT reduce risks to a certain extent. However, due to the wide range of uses of stablecoins, many regulatory agencies are paying attention. In April 2019, the New York Attorney General's Office accused BitFinex and Tether of misappropriating USDT reserves to make up for a deficit of US$850 million, and subsequently sued Bitfinex and Tether.

On October 29, Forbes, a well-known American media outlet, broke the news that BNB was intentionally evading regulation through a carefully designed corporate structure , and even hinted that the FBI was involved in the investigation. Binance angrily clarified the matter and later announced that it would sue the Forbes reporter.

Although the above-mentioned Forbes's suggestion that it was investigated by the FBI is most likely groundless, what many people did not pay attention to is that in July last year, the SEC authorized CipherTrace, which had reached a cooperation with Binance in the field of security, to track Binance Chain and BNB. The initial term of the authorization is one year, and it can be extended for up to 4 years. This shows that BNB has long been in the sight of the "Iron Fist". It depends on Binance's response. If it responds well, it may end like EOS paying a small fine. Reference Will Binance, which has a profit of 1 billion US dollars, attract US government supervision? The problem comes from derivatives and security tokens

LINK and TRON have been exposed by serious attackers, and public opinion has exaggerated the attention of regulators to them. Zeus Capital, a well-known short seller, has been attacking LINK and immediately claimed that LINK will be investigated by the SEC. TRON was exposed by the well-known American technology media the Verge in a long article due to its consistent radical style, and was criticized by Adam Cochran on January 5. However, the influence of these two is relatively small.

In addition, there is a certain probability that Polkadot will be regulated because of its greater influence and large fundraising; XLM because of its similarity to XRP; and ADA because of its obvious centralized operation.