This morning, the U.S. Securities and Exchange Commission (SEC) sued Coinbase, the largest domestic cryptocurrency exchange, for securities laws violations. The suit comes just one day after the SEC sued Binance, the largest crypto exchange in the world by volume, also over securities matters.
In the wake of the Binance suit, Coinbase shares fell 9% yesterday, and they are down more than 20% in early trading this morning. The company has shed billions of dollars in value thus far this week.
After the SEC announced its suit against Binance, the value of many major crypto assets declined — BNB, the Binance house token is down about 7%. The Coinbase news is still being digested by the larger web3 world, but all major crypto coins are in the red in the last hour. Coinbase did not share a comment following a TechCrunch request by the time of publication.
Both filings listed a handful of cryptocurrencies as securities, with 12 different assets noted in the Binance suit and 13 in the Coinbase one, though the SEC said it was “not limited to” those. Both two suits mentioned SOL, ADA, MATIC, FIL, SAND and AXS. The two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, were not mentioned, but we should note that SEC Chair Gary Gensler has called Bitcoin a commodity in the past.
Coinbase did not immediately share a comment.
The lawsuits have been criticized widely by the crypto industry, who argue that the agency is overreaching by listing a number of cryptocurrencies as securities without addressing the assets individually in detail.
To the regulators’ point, starting individual lawsuits for the thousands of cryptocurrencies out there would not only be tedious and time consuming, but repetitive and unnecessary if the agency finds the assets fit under the same umbrella.
The SEC has lately taken an increasingly active role in the burgeoning blockchain sector, and has even served Coinbase with a Wells notice. Coinbase, in contrast, has taken a publicly defiant tone, arguing that the crypto market deserves a tailored package of rules.
The SEC, however, disagrees, apparently determined on applying existing securities law to the American company.
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