US regulators have stepped up their crackdown on the cryptocurrency industry by filing lawsuits against two major players in consecutive days.
The Securities and Exchange Commission (SEC) sued Coinbase, a leading cryptocurrency platform, alleging that it operated as an unregistered securities exchange and evaded investor protection regulations. The move follows an SEC lawsuit against Binance, the world’s largest cryptocurrency exchange, for multiple alleged securities law violations.
If successful, the lawsuits could lead to significant regulatory changes in the crypto market, as the SEC asserts its authority over cryptocurrencies that have long argued against classification as securities. Coinbase has already suffered the fallout, with a significant exodus of users and a drop in its shares.
The SEC’s actions are part of its broader push to subject cryptocurrencies to federal securities laws. The regulator claims that tokens should be considered securities and therefore fall under its jurisdiction. This approach contrasts with the crypto industry’s argument that tokens do not meet the definition of securities and should not be regulated by the SEC.
The SEC’s lawsuits against Coinbase and Binance reflect its increasingly aggressive stance and intent to enforce compliance within the industry.
Coinbase, which has served more than 108 million users, is accused of making billions of dollars by facilitating the trading of crypto-asset securities without proper registration. The SEC alleges that Coinbase traded securities without meeting disclosure requirements necessary to protect investors. The suit seeks civil penalties, recovery of ill-gotten gains, and injunctive relief.
Coinbase and other crypto companies insist that the SEC’s rules are vague and that the regulator is overstepping its authority by trying to regulate the industry. However, many companies have taken steps to increase compliance and expand operations outside the US in response to the regulatory crackdown. The outcome of these lawsuits will have significant implications for the crypto market, as a ruling in favor of the SEC could change the industry and subject it to more stringent regulation.
Overall, the SEC’s actions against Coinbase and Binance represent a significant development in the ongoing battle between regulators and the crypto industry. The lawsuits highlight the increased regulatory scrutiny facing cryptocurrency platforms and the potential for fundamental change in the regulatory landscape of the crypto market.