the second Twenty-four hours later, the U.S. Securities and Exchange Commission sued a major cryptocurrency exchange. Yesterday, regulators filed charges against Binance and its CEO, Changpeng Zhao, for manipulative trading practices, mishandling of client assets, and failures of corporate control. Today, the SEC followed suit with a lawsuit against Nasdaq-listed exchange Coinbase alleging violations of securities laws.
The double salvo sends a clear message that the SEC is gunning for cryptocurrencies. The result of this could be that the popular crypto asset is inaccessible to U.S. investors.
Adjunct Professor, Columbia Business School, Rebuilding Trust: The Curse of History and the Cryptotherapy of Currencies, Marketplaces, and Platforms.
The SEC’s latest complaint doubles down on its longstanding claim that many crypto tokens are merely securities, as that is defined under current U.S. law. That means they fall within its purview, the regulator said. Based on this interpretation, the lawsuit filed in the Southern District of New York accuses Coinbase of knowingly operating an unregistered securities exchange by selling tokens including Sol, Ada, and Matic to U.S. investors. The SEC also accused Coinbase of violating securities laws with regard to its staking service, which allows customers to earn profits by pooling and locking up certain crypto assets.
“You can’t ignore the rules just because you don’t like them, or because you prefer different rules: the consequences for the investing public are too great,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement, in a public statement. middle. “Coinbase is fully aware of the applicability of federal securities laws to its business activities, but willfully refuses to comply.”
Like Binance yesterday, Coinbase has shifted the blame to regulators, claiming the SEC has failed to carve out a path to compliance for crypto businesses. “In the absence of clear rules for the digital asset industry, the SEC’s reliance on an enforcement-only approach is harming U.S. economic competitiveness,” said Paul Grewal, the firm’s chief legal officer. He claimed that Coinbase had “demonstrated a commitment to compliance” and would continue to operate as usual while defending against the complaint.
This tension over the interpretation of existing securities laws and whether they apply to cryptocurrencies will be at the center of future cases, according to independent crypto analyst Noelle Acheson. “It was a very tight game,” Acheson said.
With filings against Coinbase and Binance, the SEC now officially claims Seven of the top 15 The largest cryptocurrencies are securities.Bitcoin is considered an exception, and the SEC has yet to make a definitive ruling on ether, but the agency “appears to be using a broad standard to classify these tokens as securities,” says the author of the Crypto Skeptic blog Molly White says Web3 is going great.
