These allegations have massive implications for the larger cryptocurrency industry as well, and may just be what keeps the ecosystem within the current crypto winter. In contrast, Binance is facing much heavier, clear-cut allegations: the SEC has a laundry list of accusations against the company and founder Zhao, ranging in nature from securities violations to alleged deceptive practices to commingling consumer funds in offshore accounts. For Coinbase, it appears that the suit is largely hinged on ambiguous US securities policy, and a disagreement between the SEC and Coinbase regarding whether some of the cryptocurrencies traded on the platform can qualify as securities, and be regulated as such.
Though these two exchanges are similar in terms of scale and the large role they play within the greater crypto ecosystem, the two lawsuits differ greatly in terms of what the SEC has alleged against the two companies. Beyond cryptocurrency trading, they offer several services to consumers and blockchain builders. This new era of policymaker scrutiny against digital assets will have cascading effects on all parties involved within the ecosystem - investors, builders, asset holders, consumers - which begs the questions: what does this all mean, and what comes next?īinance + Coinbase … What’s the relevance?īy market cap, Binance and Coinbase are the two largest centralized cryptocurrency exchanges in the world, listing hundreds of digital assets globally. While these recent actions quickly led to a temporary decrease in the price of major cryptocurrencies across all exchanges, they also signify the approach of much longer term consequences that are on the horizon in what is already a bleak crypto winter. On June 5th, the SEC sued Binance over several alleged violations of national security policies, noting “an extensive web of deception” from CEO Changpeng Zhao. Securities and Exchange Commission’s (SEC) recent actions against Binance and Coinbase signal a new incoming season for the cryptocurrency ecosystem, one driven by regulatory actions and consequential market responses. Introductionīuilding Background on Binance and Coinbase
It emphasizes our opinion that there is a need for clear-cut regulations and collaboration between the crypto community and policymakers to foster growth and financial inclusivity in the evolving Web3 landscape. The paper examines our views of the implications of these lawsuits for investors, digital asset holders, other exchanges, and the overall ecosystem. Though the two exchanges face very different accusations, the underlying theme of the SEC’s complaints show that there is need for increased perspective within the Web3 policy field. These actions signify increased regulatory scrutiny and potential long-term consequences for the crypto industry. This paper written by Winnie Wang, Research Intern at Struck Crypto, deep dives into the recent SEC lawsuits against two of the world’s biggest and most influential cryptocurrency exchanges, Binance and Coinbase.
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