US Coinbase lawsuit ramps up crypto crackdown after targeting Binance, which could make it harder for Americans to trade
- The Securities and Exchange Commission alleges that Coinbase for years let users trade crypto tokens that were unregistered securities
- The suit came a day after the SEC sued Binance, taking a hard line on securities rules that could make it difficult to trade most crypto
The Securities and Exchange Commission widened its sweeping crackdown on crypto by accusing Coinbase Global Inc of running an illegal exchange, a move that could make it harder for the industry to operate and for US citizens to trade.
The SEC moved against Coinbase, the biggest US crypto exchange, after Chair Gary Gensler repeatedly argued that most tokens are subject to his agency’s oversight and that swaths of the industry have been breaking the law. At the same time, US regulators warned banks to steer clear of crypto because of potential risks to the financial system, making it harder for US citizens to invest.
The SEC’s civil lawsuit stands out because of Coinbase’s high profile in the US, and its status as a publicly traded company. The stock fell 12 per cent to close at US$51.61 in New York trading. At one point on Tuesday, the declines shaved about US$1.5 billion off the company’s market capitalisation.
The case against Coinbase, coupled with Monday’s against Binance, forms a one-two punch against the industry. The SEC alleged Binance, the world’s largest crypto platform, and its chief executive, Changpeng Zhao, mishandled customer funds, misled investors and regulators, and broke securities rules. The SEC sought a temporary restraining order on Tuesday to freeze some assets as part of that case.