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The securities regulator sued the cryptocurrency firm Coinbase on Tuesday, June 6, for operating as a stock exchange and as a stockbroker without being registered, one day after doing the same with Binance, the world’s largest cryptoactive platform. Similarities and differences of two cases that shake the digital currency market.
Ever since a series of high-profile crashes wiped out more than $1 trillion in market capitalization from the digital asset industry in 2022, global regulators have been keeping a close eye on the world of cryptocurrencies.
The United States Securities and Exchange Commission (SEC) targeted Coinbase Global and Binance and sued them for violating the inherent rules of the stock market.
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
— US Securities and Exchange Commission (@SECGov) June 6, 2023
The news caused shares of cryptocurrency and blockchain-related companies to fall in early trading on Tuesday, June 6. Coinbase shares alone were down almost 13% at the start of the day.
But what did the Fed find, and where do the two agree (and don’t)?
“They put customer assets at risk”
It is no coincidence that the lawsuits against Binance, the world’s largest cryptocurrency platform, and Coinbase, which is also in the top five, are barely a day apart, as the charges in each of the lawsuits differ in form, but not in deep.
Both civil cases are part of SEC Chairman Gary Gensler’s push to position his jurisdiction over crypto markets. However, each one has its own peculiarities.
TO coinbasethe only one listed on Wall Street after its IPO in 2021, is accused of operate as a stock exchange and stockbroker without being registeredwhile the signaling against Binance goes further: irregularly managing funds from its users and lying to investors and regulatorsamong other things.
In a statement, the SEC ensures that Coinbase also did not register the supply and demand of its ‘staking’ service or cryptocurrency betting or its operations to guarantee exchanges between investors, credit institutions and other financial agents.
“Since at least 2019, Coinbase has made billions of dollars illegally facilitating the buying and selling of crypto-asset securities,” the SEC maintains in the note, insisting that it mixes traditional stock market services with those of a stockbroker without having registered any of those functions.
In the case of Binance, the SEC accused that platform of inflating trading volumes, diverting funds from clients, inappropriately mixing assets, and misleading investors about its controls, among other things.
These simultaneous episodes bring to mind the most recent cryptocurrency fraud in the hands of Justice. US prosecutors and the SEC indicted FTX founder Sam Bankman-Fried on a series of money laundering, fraud and securities fraud charges in December. It was the second largest platform in the world.
With Reuters, AP and EFE
