Like the Blue Jays in 92/93, the US Securities and Exchange Commission (SEC) has gone back-to-back. Back-to-back with crypto lawsuits, that is.
What happened: The US’ top financial regulator sued Coinbase—the biggest crypto exchange in the country—on the grounds it broke the law by selling securities without registering as an exchange, brokerage, and clearing agency.
- "Coinbase’s alleged failures deprive investors of critical protections,” SEC chair Gary Gensler said, “including rulebooks that prevent fraud and manipulation.”
The suit comes just a day after the SEC sued Binance—the world’s largest crypto exchange—making similar accusations that it acted as an unlicensed securities exchange.
- That suit also includes some spicier accusations, including allegations that Binance engaged in market manipulation and illegally funnelled customer funds to a separate company controlled by Chinese-Canadian CEO Changpeng “CZ” Zhao.
Why it matters: The outcomes of these suits will determine whether or not certain crypto tokens are securities. This could give the SEC broad jurisdiction over crypto trading and move it closer towards its goal of remaking the crypto market in the image of Wall Street.
- Between the two suits, 19 different crypto assets were listed as securities, though the SEC said it was “not limited to” those. Notably, Bitcoin and Ethereum were not listed.
Bottom line: The SEC’s suits against these platforms have been years in the making. Moving in for the kill now shows confidence that it will get its way. If it does, other regulators could follow suit, potentially spelling an end to the freewheeling nature of the crypto industry.—QH