For the second times in 24 hours, the United States Securities and Exchange Commission has sued a major cryptocurrency exchange. Yesterday, the regulator filed a complaint against Binance and its CEO, Changpeng Zhao, with charges of manipulative business practices, mismanagement of customer assets, and corporate control failures. Today, the SEC sued the Nasdaq-listed exchange Coinbase, alleging it violated securities laws.
The double salvo sends a clear message that the SEC is targeting crypto. The result of this could be that US investors lose access to popular crypto assets.
“We are reaching an end state where if the current regulatory crackdown in the United States continues unchecked, you essentially ban most crypto activity in the United States,” says Omid Malekan, adjunct professor at Columbia Business School and author of Re-architecting Trust: The Curse of History and the Crypto Cure for Money, Markets and Platforms.
The SEC last complaint double on his long-standing assertion that many crypto tokens are simply securities, as defined by applicable laws in the United States. That means they fall under its jurisdiction, the regulator says. Based on this interpretation, the lawsuit, filed in the Southern District of New York, accuses Coinbase of knowingly operating an unregistered stock exchange by selling tokens, including Sol, Ada, and Matic, to US investors. The SEC also accuses Coinbase of violating securities law in connection with its staking servicewhich allows clients to make profits on certain crypto assets by pooling and locking them.
“You simply can’t ignore the rules because you don’t like them or because you prefer others: the consequences for the investing public are far too great,” said Gurbir S. Grewal, director of the division. of the SEC’s application, in a public statement. “Coinbase was fully aware of the applicability of federal securities laws to its business activities, but deliberately refused to follow them.”
Like Binance yesterday, Coinbase pointed the finger at the regulator, saying the SEC had failed to pave the way for compliance for crypto firms. “The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness,” said Paul Grewal, the company’s chief legal officer. Coinbase has “demonstrated its commitment to compliance,” it claims, and will continue to operate as usual while it defends itself against the lawsuit.
This tension — over the interpretation of existing securities laws and their application to crypto — will be the focus of the upcoming case, says independent crypto analyst Noelle Acheson. “It really is a game,” Acheson says.
With the filings against Coinbase and Binance, the SEC has now officially alleged that seven of the top 15 the largest cryptocurrencies are securities. bitcoin is considered an exceptionand the SEC hasn’t issued a clear verdict on Ether, but the agency “appears to be using a broad rubric to classify these tokens as securities,” says crypto-skeptic blog author Molly White Web3 is doing great.