Coinbase CEO Brian Armstrong discusses how the SEC’s inquiries have changed over the past year as the SEC reports lawsuits against the two largest cryptocurrency exchanges, Coinbase and Binance.
This development has significant ramifications for the cryptocurrency industry, changing a market that has always operated largely outside of governmental structures.
It becomes crucial to understand the changing landscape of cryptocurrency regulation and its potential impact on traders and market participants in the wake of these legal disputes.
The Highlight of the SEC’s Lawsuits: Coinbase and Binance
The SEC’s action against Coinbase and Binance marks a significant uptick in the regulatory campaign against the cryptocurrency industry. By challenging the idea that tokens are not securities and will remain beyond the scope of the fee, the SEC challenges the claim that it has no jurisdiction over the market. Even if the circumstances surrounding the two exchanges are different in nature, they all point to the SEC’s more aggressive campaign to bring cryptocurrencies inside the purview of federal securities laws.
Allegations Against Coinbase of Avoiding Disclosure Obligations
Outstanding bitcoin platform Coinbase is accused of dodging disclosure requirements and acting as a middleman on transactions worth billions of dollars in cryptocurrencies at least since 2019. According to the SEC, Coinbase is purchasing and reselling at least 13 crypto assets, including tokens like Solana, Cardano, and Polygon, that should have been registered as securities. The case seeks to recover illegally obtained assets, levy civil fines, and seek an injunctive relief.
Working on a “Internet of Deception” is Binance.
The SEC has accused Binance, the biggest cryptocurrency alternative in the world, of operating a “net of deception.” Binance and its CEO Changpeng Zhao are being sued for allegedly mishandling customer cash, misleading traders and authorities, and breaking securities rules. By establishing the SEC’s jurisdiction and laying the groundwork for increased regulation, these cases might transform the cryptocurrency market if they are successful.
Crackdown by the SEC & Coinbase’s Inventory
This week’s SEC-led “good crypto reckoning” caused significant collateral damage and had a partial negative impact on Coinbase stock. Costs of crypto assets related to the industry saw a sharp fall as a result of the regulatory authority filing back-to-back litigation against major exchanges.
After news about Binance sent shares of Coinbase down 9% on Monday, the company itself became the target of a lawsuit on Tuesday, which sent shares even further down 21% to intraday lows. In general, the inventory experienced a startling 28% decline from its lowest point on Tuesday’s closing value for the previous week.
When asked by a news reporter for a global media outlet about the possibility of Coinbase losing customers or banking partners, CEO Armstrong voiced confidence and said,
Following the fall, Coinbase’s shares had a 3.2% gain on Wednesday, reaching roughly $53.28. Notably, on Tuesday, Cathy Wooden’s investment funds increased their stake in the cryptocurrency company.
Market Influence and Investor Behavior
Market volatility has come from the regulatory steps taken against Coinbase and Binance, with traders looking for stability in the face of regulatory uncertainty. It appears that the primary cryptocurrency, Bitcoin, benefited paradoxically from the crackdown. Following a brief decline in response to the Binance lawsuit, Bitcoin recovered and surpassed previous highs.
With a current price of $26,337.21 (BTC Value Immediately), Bitcoin has a total market value of $510.83 billion USD. The amount of goods bought and sold over a 24-hour period is $17.26 billion USD.
According to the development, the SEC’s activities are making it tough for other cryptocurrencies (Altcoins), which is pushing retailers back towards Bitcoin.
The favorite Altcoin, Ethereum, currently has a value of $1,840.11 (ETH Value Immediately), with a $7.22 billion 24-hour trading volume. The price of ETH has dropped by 1.94% in the last day. Right now, it is down 3.86% from its seven-day high of $1,913.96. About 120.23 million ETH are now in circulation.
The cryptocurrency industry is approaching a turning point as the SEC’s legal battles against Coinbase and Binance progress.
The market may be altered by the changing regulatory landscape, which could assert regulatory authority and make it more difficult to maintain the status of tokens as securities.
In the interim, it’s critical to prevent the incident from causing the impacted exchanges, and more crucially, the entire crypto industry, any irreversible harm.