Regulator says the exchanges flouted its rules on securities. Crypto stakeholders say unclear regulations put the US at risk of falling behind other nations.

Joao-Pierre S. Ruth, Senior Editor

June 12, 2023

Some courtroom conflicts may be inevitable.

Last Monday, the Security and Exchange Commission filed lawsuits against cryptocurrency exchanges Binance and Coinbase, citing a variety of different charges tied to the theme that they had allegedly broken rules on securities.

The suits are not identical yet share the SEC’s stance of wanting to classify cryptocurrencies as securities and subject to its rules. The charges leveled against Binance include allegedly letting “high-value” customers in the United States use its main international exchange, which was banned in this country in 2019. There is a Binance US exchange, but the SEC claims some domestic customers were given access to the international version.

Coinbase is no stranger to the SEC’s complaints having faced increasing scrutiny from the regulator in the preceding months. For its part, Coinbase was actually getting ready to testify before Congress on the need for clarity in the regulation of crypto in the US but then the SEC woke up and chose litigation by launching its lawsuits.

There are some diametrically opposed perspectives at play here, with regulators insinuating that the crypto scene knowingly defies its authority while crypto stakeholders say these are intimidation tactics fueled by government overreach.

This will likely be a messy fight -- a slobberknocker in the words of wrestling commentator Jim Ross -- because there are deeply entrenched interests at play, and no one seems ready to back down.

What to Read Next:

Why Banks Must Embrace Blockchain Beyond Cryptocurrency

What Just Broke?: Revival of Bankrupt FTX Teased by Attorneys

Q&A: The Failed Binance -- FTX Deal and the Crypto Winter

About the Author(s)

Joao-Pierre S. Ruth

Senior Editor

Joao-Pierre S. Ruth covers tech policy, including ethics, privacy, legislation, and risk; fintech; code strategy; and cloud & edge computing for InformationWeek. He has been a journalist for more than 25 years, reporting on business and technology first in New Jersey, then covering the New York tech startup community, and later as a freelancer for such outlets as TheStreet, Investopedia, and Street Fight. Follow him on Twitter: @jpruth.

Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.

You May Also Like

More Insights