The US Securities and Exchange Commission (SEC) accused Coinbase of operating the exchange illegally, just a day after suing Binance. This move is expected to cause difficulties for the cryptocurrency market and American investors.
On June 5, the SEC accused the world’s largest cryptocurrency exchange Binance and CEO Changpeng Zhao of directing cash flows, misleading investors and regulators, and violating securities laws.
According to SCMP, Associate Professor at Columbia University (USA) Omid Malekan said that the cryptocurrency market will “die slowly” if it follows the regulations of the SEC under Chairman Gary Gensler.
In an interview on Bloomberg, Gensler shared that the SEC has worked with 10 states to file a complaint against Coinbase. He views the SEC’s efforts to regulate cryptocurrencies as one of the measures to protect investors and the integrity of the US market
Coinbase was co-founded in 2012 by Brian Armstrong. The Coinbase CEO is not accused of misconduct in the SEC complaint. While Binance is the largest cryptocurrency exchange in the world, Coinbase is the largest cryptocurrency exchange in the US, with over 150 different tokens traded. Coinbase Chief Legal Officer Paul Grewal has stated that tokens are not securities. The SEC’s reliance on an enforcement approach in the absence of clear regulation for the digital asset industry is hurting the economic competitiveness of the US and companies like Coinbase, Grewal said.
A virtual currency can fall under the jurisdiction of the SEC if investors buy it to fund a company or project with the intention of making a profit. In the complaint, the SEC alleges that many of the tokens offered on Coinbase are securities, including SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO.
According to SCMP, the question of whether certain tokens are securities or not has dogged the crypto industry for years. In 2020, the SEC sued Ripple Labs Inc, claiming that its XRP token is a security and subject to SEC regulation