The recent actions taken by the US Securities and Exchange Commission (#SEC ) against #Coinbase and #Binance , two major crypto exchanges, have put other US exchanges on high alert. The #SEC filed lawsuits against Coinbase, alleging that it traded at least 13 cryptocurrencies that should have been registered as securities, and against Binance, accusing the exchange of offering 12 cryptocurrency coins without proper registration.
These lawsuits have expanded the list of cryptocurrencies explicitly identified by the #SEC as securities. This development raises concerns about other exchanges that have allowed US investors to trade these tokens, including #Kraken , #Gemini , Crypto.com, and Okcoin. Industry executives believe these exchanges could also face regulatory action and may consider delisting the tokens in question.
Jason Allegrante, Chief Legal and Compliance Officer at Fireblocks, a digital asset infrastructure provider, emphasized that all US exchanges should be aware that enforcement action may be taken against them if they allow or have allowed the trading of these tokens.
Both Coinbase and Binance have denied the allegations made by the #SEC and have expressed their determination to vigorously defend themselves in court. The SEC has refrained from commenting on the lawsuits.
Under the leadership of Gary Gensler, the SEC has been asserting its jurisdiction over the crypto industry, considering most tokens as securities subject to strict disclosure rules. To date, the agency has initiated over 130 crypto-related lawsuits and settlements. In several cases, specific tokens have been classified as securities.
The recent lawsuits brought against Coinbase and Binance by the SEC have expanded the list to include commonly traded tokens such as Solana, Cardano, and Polygon. Scott Freeman, Co-founder of JST Digital, a financial services firm focused on digital assets, anticipates the possibility of additional lawsuits from US regulators, potentially from the Department of Justice.
Crypto companies, including Coinbase and Binance, have challenged the SEC's authority, arguing that many tokens should be classified as commodities. They have called for clear regulatory guidelines rather than relying on enforcement actions to assert jurisdiction.
While the legal battles between the SEC and crypto companies may take years to resolve, the lawsuits serve as a clear message that the agency is committed to regulating the industry. Executives note that while larger crypto companies can afford to fight the SEC, smaller firms have faced bankruptcy due to enforcement actions.
Stuart Alderoty, Chief Legal Officer at Ripple, expressed the belief that the #SEC , under its current leadership, is engaged in a coordinated campaign to undermine the crypto economy in the US. This sentiment aligns with Gensler's suggestion that an industry shake-out would benefit investors.
Although approximately 90% of crypto trading already occurs outside the US, industry insiders anticipate that exchanges will continue expanding into international regions with more favorable regulations. Coinbase has previously mentioned the possibility of relocating its global headquarters outside the US.
The prevailing trend of regulation through enforcement has touched many firms, leading them to consider similar actions. Katharine Wooller, Business Unit Director at Coincover, a provider of insurance for digital assets, predicts that more firms will follow suit and seek jurisdictions with more accommodating regulatory frameworks.
