SEC

Crypto one-two punch

SEC goes after crypto exchanges Binance and Coinbase.
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Illustration: Francis Scialabba, Photo: Kevin Dietsch/Getty Images

3 min read

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The Securities and Exchange Commission is cracking down on crypto. Just one day after the SEC sued Binance, the world’s largest cryptocurrency exchange, it also sued Coinbase, setting the stage for an industry-wide reckoning.

In the lawsuits, the SEC accused Binance of engaging in “an extensive web of deception” amounting to a “calculated evasion of the law,” while the SEC accused Coinbase, currently the biggest US crypto platform, of failing to register as an exchange, among other charges.

And the hits didn’t stop there. On Tuesday evening, the SEC asked a federal court for a temporary restraining order to freeze Binance’s US assets to ensure Binance's US customers’ assets remain protected “through the resolution of the SEC’s pending litigation of this matter.”

The one-two punch is part of a broader push by SEC Chair Gary Gensler to wrangle the industry he’s labeled the “Wild West” with respect to regulation.

Since 2022, the SEC has launched more than 30 crypto-related enforcement actions, while ramping up its efforts against celebrity investors in recent months.

While the broader implications of the crackdown will continue to emerge in the coming months, the SEC is clearly establishing the foundation of its legal argument against the industry with these two heavy hitters.

Among other charges, Binance and Coinbase were both targeted for concurrently operating as unregistered exchanges, brokers, and dealers, while SEC Chair Gensler has maintained that crypto tokens should be registered as securities and subject to securities laws.

Given the longstanding nature of the SEC’s crusade against crypto, however, the industry has had ample time to prepare—and Binance and Coinbase had terse words for the SEC.

“The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance,” Paul Grewal, Coinbase’s chief legal officer and general counsel, said in a statement, adding that the company will “continue to operate our business as usual.”

Binance, meanwhile, said the company was “disheartened” by the SEC’s complaint, calling the lawsuits “misguided.”

In any case, customers took the lawsuits to heart: According to blockchain data firm Nansen, Coinbase customers withdrew more than $57 million after the filing. Meanwhile, users pulled more than $3 billion from Binance within 24 hours after the SEC filing.

The message is clear: Crypto’s in crisis.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.