# Analysis-US SEC crackdown on Coinbase, Binance puts crypto exchanges on notice Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-06-09 Category: Uncategorized Category URL: https://financedigest.com/category/uncategorized Meta Title: SEC Crackdown on Coinbase, Binance: Crypto Exchanges Alert Meta Description: Stay informed as the SEC takes action against top exchanges for allegedly breaching rules. Are other exchanges at risk? Find out more here. URL: https://financedigest.com/analysis-us-sec-crackdown-on-coinbase-binance-puts-crypto-exchanges-on-noticehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-06-08t213441z1lynxmpej570shrtroptp4usa-sec-regulation-1736813914093-compressed.jpg) # Analysis-US SEC crackdown on Coinbase, Binance puts crypto exchanges on notice By Hannah Lang WASHINGTON (Reuters) -Other U.S. crypto exchanges are likely to be in the firing line after the Securities and Exchange Commission (SEC) this week sued Coinbase and Binance, two of the world’s largest crypto exchanges, for allegedly breaching its rules. The SEC on Tuesday alleged Coinbase traded at least 13 crypto assets that are securities and which should have been registered, while on Monday it also accused Binance, the world’s largest [cryptocurrency exchange](https://www.financedigest.com/verasity-vra-lists-on-tier-1-cryptocurrency-exchange-crypto-com.html "Verasity $VRA Lists on Tier-1 Cryptocurrency Exchange Crypto.com"), of offering 12 cryptocurrency coins without registering them as securities. The lawsuits expand the overall number of cryptocurrencies that the SEC has explicitly identified as securities. That raises questions about other exchanges that have also allowed U.S. [investors to trade](https://www.financedigest.com/how-to-begin-investor-trading-in-australia.html "How to begin investor trading in Australia") those tokens, such as Kraken, Gemini, Crypto.com and Okcoin, and whether they could be at risk of regulatory action, industry executives said. Some [exchanges may look to de-list the tokens](https://www.financedigest.com/taas-the-first-ever-tokenized-closed-end-fund-dedicated-to-blockchain-assets-partners-with-exchange-platforms.html "TaaS, the First-Ever Tokenized, Closed-End Fund Dedicated to Blockchain Assets, Partners With Exchange Platforms") in question. “All U.S. exchanges should now be on notice that they may be subject to enforcement action if they permit, or have permitted, these tokens to be traded,” said Jason Allegrante, [chief legal and compliance officer](https://www.financedigest.com/inmobi-names-inderbir-singh-pall-as-chief-technology-officer-of-inmobi-advertising-platform.html "InMobi Names Inderbir Singh Pall as Chief Technology Officer of InMobi Advertising Platform") at Fireblocks, a digital asset infrastructure provider. A spokesperson for crypto [exchange Bitstamp said the company takes “all new regulatory developments very seriously” and is “currently reviewing the new information](https://www.financedigest.com/the-health-information-exchange-market-to-grow-on-a-satisfactory-note.html "The Health Information Exchange Market to grow on a satisfactory note") that has come out this week to determine what actions to take. Both Coinbase and Binance deny the SEC’s allegations and have pledged to vigorously defend themselves in court. The SEC declined to comment. While crypto companies started out in a regulatory gray area, the SEC under the leadership of Gary Gensler has steadily asserted the agency’s jurisdiction over the industry, arguing most tokens meet the definition of a security and should be subject to the same strict [disclosure rules](https://www.financedigest.com/britain-to-be-among-first-to-apply-new-climate-disclosure-rules.html "Britain to be among first to apply new climate disclosure rules"). The agency has brought more than 130 crypto lawsuits and settlements to date, [according to data from consultancy Cornerstone Research](https://www.financedigest.com/senior-leaders-more-at-risk-of-burnout-than-ceos-according-to-new-research.html "Senior leaders more at risk of burnout than CEOs, according to new research") and the SEC website, and in several of those cases has named specific tokens as securities. The Coinbase and Binance suits this week [expand that list](https://www.financedigest.com/european-p2p-leader-twino-expands-to-central-asia-and-begins-listing-kazakhstan-loans.html "European P2P leader TWINO expands to Central Asia and begins listing Kazakhstan loans") to include some commonly traded tokens, such as Solana, Cardano and Polygon. “We would not be surprised to see more lawsuits from the U.S. regulators, and possibly the Department of Justice, in the [next few weeks,”](https://www.financedigest.com/hungary-cenbank-seen-hiking-100-bps-to-11-75-next-week-as-inflation-surges.html "Hungary cenbank seen hiking 100 bps to 11.75% next week as inflation surges") said Scott Freeman, co-founder of JST Digital, a financial services firm focusing on digital assets. A spokesperson for the Justice Department declined to comment. Crypto companies, including Coinbase and Binance, dispute the SEC’s authority, saying many tokens are more akin to commodities, and have repeatedly [called for regulators to create clear rules](https://www.financedigest.com/us-senate-leader-schumer-calls-for-ai-rules-as-chatgpt-surges-in-popularity.html "US Senate leader Schumer calls for AI rules as ChatGPT surges in popularity") rather than assert their jurisdiction via enforcement actions. “We do not list securities. For every asset we list, our teams conduct thorough risk and [security evaluations which includes a comprehensive legal](https://www.financedigest.com/what-does-good-look-like-for-legal-sector-it-security.html "What does ‘good’ look like for legal sector IT security?") and compliance process. We will continue to closely [monitor this case and others for precedential rulings,”](https://www.financedigest.com/telehealth-monitoring-to-rule-the-prosthesis-implantation-instruments-market.html "Telehealth monitoring to rule the Prosthesis Implantation Instruments Market") a spokesperson for Kraken said. Gemini, Crypto.com and Okcoin did not immediately respond to a request for comment. ## ‘DESTROY THE CRYPTO ECONOMY’ The latest lawsuits will play out in court, which could take years. An SEC suit alleging Ripple’s XRP token is a security, for example, has been under litigation for more than two years. But whether the SEC wins or loses, the suits send a strong [signal to the industry](https://www.financedigest.com/signal-transformer-market-one-the-most-booming-industry-in-upcoming-years-due-to-global-demand-in-industry-by-2027.html "Signal Transformer Market| One the Most Booming Industry in Upcoming Years Due to Global Demand in Industry by 2027") that the agency is not going to let up, executives said. While [big crypto companies](https://www.financedigest.com/big-companies-manage-to-pass-on-soaring-costs-to-cash-strapped-consumers.html "Big companies manage to pass on soaring costs to cash-strapped consumers") can afford to fight the SEC, smaller companies have filed for bankruptcy following SEC enforcement actions, including crypto exchange Beaxy. I don’t think that this SEC under this leadership necessarily cares whether they [win or lose in the courts](https://www.financedigest.com/tesco-wins-appeal-in-trademark-fight-with-lidl-in-uk-court.html "Tesco wins appeal in trademark fight with Lidl in UK court"). I think what they are engaging in is a coordinated campaign to essentially destroy the crypto economy in the United States,” Stuart Alderoty, [chief legal officer](https://www.financedigest.com/future-market-insights-appoints-aditi-basu-as-chief-marketing-officer.html "Future Market Insights Appoints Aditi Basu as Chief Marketing Officer") at Ripple, told the Piper Sandler Global Exchange & Fintech Conference in New York on Wednesday. Gensler has suggested an industry shake-out would be good for investors. “I disagree with the notion … that crypto intermediary compliance isn’t possible,” Gensler said in a speech on Thursday, adding however that “it takes work.” According to analysts at Bernstein, roughly 90% of crypto trading already takes place outside the U.S. Executives said they [expected exchanges to continue to expand](https://www.financedigest.com/aquafeed-market-expected-to-expand-more-than-three-fold-through-2027.html "Aquafeed Market Expected to Expand More than Three-Fold through 2027") into international regions that have more favorable regulations. Coinbase, for example, has previously said it would consider moving its [global headquarters](https://www.financedigest.com/ion-pacific-strengthens-global-leadership-team-as-it-launches-new-european-headquarters-in-london.html "Ion Pacific strengthens global leadership team as it launches new European headquarters in London") outside of the U.S. I would imagine that other firms spooked by the prevalent trend for regulation by enforcement will [follow suit,”](https://www.financedigest.com/why-google-is-never-closed-for-maintenance-and-how-banks-can-follow-suit.html "Why Google is never closed for maintenance and how banks can follow suit") said Katharine Wooller, business unit director at Coincover, a provider of insurance for digital assets. [(Reporting by Hannah Lang in Washington; Additional reporting by John McCrank in New York and Susan Heavey in Washington; Additional reporting and writing by Michelle Price; Editing by Stephen Coates and Paul Simao)](https://www.financedigest.com/tesco-reported-to-competition-watchdog-by-consumer-group-over-pricing-concerns.html "Tesco reported to competition watchdog by consumer group over pricing concerns") --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---