Less than 24 hours after the American Securities and Exchange Commission (SEC) de hunt officially opened on Binance, the SEC has already selected another victim. This time it is about Coinbase, just like Binance, of course, a very large player in the crypto landscape. The charge against Coinbase is very similar to the one against Binance. The SEC claims so Coinbase operates as an unregistered exchange and allowed trading of securities without a license.
SEC opens hunting season
The lawsuit which the SEC just brought against Coinbase, and its holding company CGI, claims that Coinbase has not followed the rules for years. Among other things, the crypto staking service that Coinbase offers would, according to the SEC, violate applicable securities laws.
Today we charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency and for failing to register the offer and sale of its crypto asset staking-as-a-service program.https://t.co/XPG2gDkxtV pic.twitter.com/hCdVMw8B2v
— U.S. Securities and Exchange Commission (@SECGov) June 6, 2023
This securities law is often reflected in the indictment. For example, Coinbase, like Binance, would not have done its best to ensure that cryptocurrencies they offer cannot be seen as securities under any circumstances. Coinbase has thus facilitated the trading of securities without a license, according to the SEC.
“But while paying lip service to its desire to comply with applicable laws, Coinbase has for years made available for trading crypto assets that are investment contracts under the Howey test and well-established principles of federal securities laws,” the SEC alleges.
The indictments state 13 cryptocurrencies by the SEC as a security, either security, labeled. These are: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO. Astute readers will have noticed that this list is somewhat similar to a similar list published yesterday with the Binance indictment.
Coinbase and bitcoin close
Due to the news, Coinbase’s share is in any case very heavy. At the moment $COIN is during premarket trading already about 16% down. It looks like it’s going to be a tough day for the Coinbase team.
$COIN down 16% pre-market as SEC lawsuit comes in. pic.twitter.com/WEgwRO5Odl
— Nebraskangooner (@Nebraskangooner) June 6, 2023
Also the bitcoin (BTC) price reacted violently to the news, just like yesterday. Within minutes, the bitcoin rate by about 1.5%, but at the time of writing we cannot yet speak of a really severe crash.
It seems very likely no coincidence that Coinbase is being called on the mat by the top US regulator right after Binance. It is clearly part of the ongoing battle between the SEC and the crypto industry in the country. It is not yet known what the concrete consequences of the lawsuits will be.