The Crypto Shakedown Continues as the SEC Sues Coinbase; Binance Next?

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In a time where the world is seeing the benefits of cryptocurrencies and many countries openly accept it, the US refuses to budge. The Securities and Exchange watchdog—SEC for short—is waging a war on crypto exchanges with newly invented rules and blows dealt to the biggest companies. Coinbase was next on target, with the popular exchange now sued by the SEC for breaking its rules.

The problem is that the rules are not clear per Coinbase. That’s the thing with the SEC – it invents new rules and puts them to use just to harm the biggest crypto companies. The regulator says that Coinbase acted without properly registering its business, allowing it to escape oversight. The move comes in the middle of a widening crypto shakedown that threatens to end it all for cryptocurrencies in the USA.

The Rules Aren’t Clear

According to Coinbase’s CLO Paul Grewal, SEC’s rules for proper registration were not clear. While waiting for the outcome of the legal action, Coinbase will conduct business as usual. This new complaint against Coinbase comes just a day after the SEC sued Binance. The world’s biggest crypto exchange was untouched for a while, but it seems that the SEC is hellbent on trading blows to the biggest platforms this year.

Binance and Coinbase have been in the business for years. After years of operation, the SEC now says that Binance mishandles customer funds and that it’s responsible for artificially inflating trading volume. It also allegedly took steps to avoid regulation in the USA, making it a villain in the watchdog’s eyes.

The SEC’s efforts took a more aggressive form after FTX’s collapse last year. It was a dramatic moment which left many people unable to access their funds, and the financial damage dealt was worth billions. It’s still not clear if all the funds will be ever recovered. While Coinbase and Binance operate on a wholly different basis, the SEC is taking no chances.

Besides the SEC, financial regulators from 10 states including Alabama and California also filed for action against Coinbase. According to reports, their problem is the same as SEC’s – the crypto exchange was fully aware of the applicability of federal laws, but chose not to follow them. That’s what pains the SEC the most, but the biggest obstacle to this is that the rules weren’t clear in the first place.

Immense Market Value

Coinbase was founded in 2012, so it’s been in operation for just over a decade. During that time, it amassed a value of nearly $100 billion. That was at the height of crypto prices a few years back. Since then, it has plunged in value, currently being worth around $12 billion.

Earlier in March this year, Coinbase warned that the SEC might take legal action. The company said that it’s trying to iron things out with the authorities, but it’s apparent that the SEC already had a move in its mind. The legal action sent the crypto market in a 12% drop, but like always, Bitcoin and the gang have rebounded quickly.

June 7, 2023: • No Comments

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