The Securities and Exchange Commission is suing Coinbase, alleging that it’s an unregistered securities broker, after targeting Binance the day before.
the Securities and Exchange Commission (SEC), headed by Gary Gensler, sued crypto exchange Coinbase for not registering as a securities broker. The day prior, the SEC filed charges against Binance for operating an unregistered securities exchange, also accusing CEO Changpeng Zhao of civil fraud.
The core issue that’s long been in dispute is whether cryptocurrencies are different from securities like stocks and bonds. If they are securities, as the SEC claims, firms like Coinbase and Binance have been illegally operating unregistered exchanges. In Coinbase’s case, the SEC alleges that it has sold 13 crypto-assets (of the roughly 250 on offer) that ought to be registered with regulators, as they deem them to be securities. Coinbase’s staking products are also deemed securities by the SEC, which the company disputes.
Many people within the crypto industry have long maintained that such digital assets should not be considered securities and that the regulatory framework surrounding crypto has been kept needlessly vague.
„I don’t feel like there’s a clear rulebook,“ Coinbase CEO Brian Armstrong told The Wall Street Journal this week. „The only sort of high-level statements they’ve made is that everything other than bitcoin is a security which, that’s just not what it says in the law. By the way, that would also kind of mean the end of the crypto industry in the U.S.“
The Coinbase news comes as no surprise. Back in March, the exchange was sent a Wells notice by the SEC, as Reason’s Brian Doherty reported at the time, which informed the company that the agency had made a „preliminary determination“ that it might be seeking enforcement action against Coinbase for purported securities law violations.
