Tuesday's SEC lawsuit seeks civil fines, the recouping of ill-gotten gains and injunctive relief. Transactions generated 75% of its $3.15 billion of net revenue last year. "We're confident the courts will prove Chair Gensler wrong in due time," she said.įounded in 2012, Coinbase recently served more than 108 million customers and ended March with $130 billion of customer crypto assets and funds on its balance sheet.
Kristin Smith, CEO of the Blockchain Association trade group, rejected Gensler's efforts to oversee the industry. Still, many companies have boosted compliance, shelved products and expanded outside the country in response to the crackdown. securities laws and we're asking them to come into compliance," Gensler told CNBC.Ĭrypto companies refute that tokens meet the definition of a security, say the SEC's rules are ambiguous, and that the SEC is overstepping its authority in trying to regulate them. "The whole business model is built on a noncompliance with the U.S. The SEC also this year sued Beaxy Digital and Bittrex Inc for failing to register as an exchange, clearing house and broker. While a few crypto companies are licensed as alternative system trading systems, a type of trading platform used by brokers to trade listed securities, no crypto platform operates as a full-blown stock exchange. More recently, it has taken aim at unregistered crypto broker dealer, exchange trading and clearing activity. SEC Chair Gary Gensler has long said tokens constitute securities and has steadily asserted its authority over the crypto market, focusing initially on the sale of tokens and interest-bearing crypto products.
Supreme Court cases to determine if an investment product constitutes a security. The Securities Act of 1933 outlined a definition of the term "security," yet many experts rely on two U.S. Securities, as opposed to other assets such as commodities, are strictly regulated and require detailed disclosures to inform investors of potential risks. "The SEC is making life nearly impossible for several altcoins and that is actually driving some crypto traders back into bitcoin," explained Oanda's Moya. It was trading just below $27,000 at 0410 GMT. Leading cryptocurrency bitcoin has been a paradoxical beneficiary of the crackdown.Īfter an initial plunge to a nearly three-month low of $25,350 following the Binance suit, bitcoin rebounded by more than $2,000, exceeding the previous day's high. Oanda senior market analyst Ed Moya said the SEC "looks like it's playing Whac-A-Mole with crypto exchanges," and because most exchanges offer a range of tokens that operate on blockchain protocols targeted by regulators, "it seems like this is just the beginning." Paul Grewal, Coinbase's general counsel, in a statement said the company will continue operating as usual and has "demonstrated commitment to compliance." Shares of Coinbase's parent Coinbase Global Inc (COIN.O) closed down $7.10, or 12.1%, at $51.61 after earlier falling as much as 20.9%.
Coinbase suffered about $1.28 billion of net customer outflows following the lawsuit, according to initial estimates from data firm Nansen.
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