Cryptocurrencies such as Bitcoin were among the high-flyers in the financial market this year, but now there are headwinds. The U.S. Securities and Exchange Commission (SEC) is targeting industry heavyweights Coinbase and Binance.
Washington/New York - The U.S. Securities and Exchange Commission (SEC) has sued Coinbase, another major trading platform for digital currencies such as Bitcoin. Coinbase offered for trading crypto assets that the SEC classifies as securities and that should have been registered by the company accordingly, according to the lawsuit filed Tuesday in court in the largest city in the United States, New York. Coinbase operates an illegal U.S. securities trading exchange and also performs certain other financial services without the necessary license.
Crypto industry: Coinbase 'proud' of indictment by US authorities
Coinbase CEO Brian Armstrong responded on Twitter with criticism of the SEC. Instead of publishing clear rules, the regulator pursues an approach of "regulation by coercion" that "endangers America". In addition, various U.S. financial regulators themselves do not agree on the legal definition of crypto assets. Coinbase is therefore proud to represent the industry in court in order to finally get more clarity. The SEC also reviewed Coinbase's business model in connection with its IPO in 2021 and had no objections to it at the time.
Coinbase CEO Armstrong has been at loggerheads with the SEC for some time anyway. For example, the U.S. company's corporate blog opened even before the lawsuit with a March post headlined: "We asked the SEC about reasonable crypto rules for Americans. Instead, we received legal threats." SEC chief Gary Gensler has made the market for digital currencies, which is often criticized as too lax regulated, a hobbyhorse. At least since the spectacular collapse of the industry giant FTX of US young entrepreneur Sam Bankman-Fried - who faces a long prison sentence for fraud allegations - the SEC has been under great pressure to tighten the reins.
Two days, two lawsuits: SEC takes a tough stance on the crypto industry
With the lawsuit against Coinbase, the authority is now further tightening its pace. The day before, the SEC had already filed a lawsuit against the operator of the world's largest crypto trading platform Binance. Gensler accused Binance and company founder and CEO Changpeng Zhao of deception, conflicts of interest, disclosure failures and calculated circumvention of laws. For example, investors have been misled about risk controls and trading volumes.
Binance said it was taking the SEC's allegations seriously. At the same time, however, the company announced that it would vigorously defend itself. Binance has actively cooperated with the investigation. The fact that the authority had nevertheless filed a lawsuit was discouraging. "The SEC's actions undermine America's role as a global center for financial innovation and leadership," the statement continued. Bitcoin, Ether and other digital currencies reacted to the SEC's lawsuits with significant price losses. Coinbase's shares slumped by almost 20 percent at times on Tuesday. (dpa, lf)