US SEC Targets Virtual Assets... Files Suit Against Coinbase Following Binance

Coinbase Stock Drops Over 12%
US Intensifies Cryptocurrency Regulation Efforts

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against the cryptocurrency exchange Coinbase. This action came just one day after the SEC sued Binance, the world's largest cryptocurrency exchange, signaling that U.S. financial authorities are intensifying their regulatory efforts on cryptocurrencies.

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On the morning of the 6th (local time), the SEC announced that it had filed a lawsuit against Coinbase in the U.S. District Court in New York, accusing the cryptocurrency exchange of operating as an unregistered broker-dealer.

In the complaint, the SEC pointed out that Coinbase has earned billions of dollars through cryptocurrency dealings since at least 2019 but violated securities laws by evading disclosure obligations meant to protect investors. The SEC determined that at least 13 virtual assets available to Coinbase customers qualify as "virtual asset securities" under federal regulatory authorities. Accordingly, Coinbase is subject to federal securities laws, but the SEC alleges that the company knowingly ignored these regulations.

SEC Chairman Gary Gensler criticized Coinbase on Twitter, stating, "Coinbase deprived investors of significant protections that could prevent fraud and manipulation by failing to comply with applicable laws."

Following the SEC's lawsuit against Binance the previous day, Coinbase's stock price fell by 9%, and on this day, it dropped more than 12%.

The day before, the SEC had filed a lawsuit against Binance and its founder and CEO Zhao Changpeng in the U.S. District Court in Washington, D.C., for violations of securities laws. The charges include allegations of profiting unfairly by using customer assets.

In the complaint, the SEC stated, "Binance and CEO Zhao profited by using customer assets worth billions of dollars but exposed those assets to significant risks." The SEC also alleged that Binance had meticulously planned these actions in advance to evade legal scrutiny.

The consecutive lawsuits against Binance and Coinbase by U.S. financial authorities are interpreted by the market as part of a recent sharp increase in cryptocurrency regulations. Since the bankruptcy of FTX, the world's third-largest cryptocurrency exchange, in November last year, voices worldwide have called for stronger cryptocurrency regulations.