Bitrabo Editorial
The recent lawsuits filed by the United States Securities and Exchange Commission (SEC) against popular cryptocurrency exchanges Binance and Coinbase have attracted backlash from prominent legal experts in the crypto industry. Both Jake Chervinsky, Chief Policy Officer at the Blockchain Association and a former SEC agent have voiced concerns about the potential impact of the SEC’s actions.
Experts Argue SEC is Hurting Investors
The SEC’s lawsuits against Binance and Coinbase have sparked discussions in the blockchain community about the regulatory body’s intervention in cryptocurrency. Cryptocurrency advocates view this action as “regressive and potentially detrimental” to the industry’s overall growth and development.
In a tweet made on June 6th, Jake Chervinsky stated that the SEC’s action has led to the “destruction” of investors’ portfolios, contradicting the SEC’s core objective of safeguarding investors’ interests.
Minutes after the SEC announced the lawsuit against Coinbase, the company’s stock at NASDAQ, COIN, dropped by over 20%. This lawsuit has added pressure to COIN, which is still recovering from the crypto winter of 2022 where the stock’s price plummeted as activity in Coinbase decreased. Consequently, the falling revenue negatively impacted COIN’s valuation, causing the stock to dip by more than 80% from its 2021 peaks.
Bitcoin’s price also tumbled on June 5th, minutes after the SEC announced the lawsuit against Binance. The cryptocurrency is currently trading below critical levels posted in May and remains under pressure below $27,000.
The SEC has justified its enforcement actions against several cryptocurrency projects, stating that its primary mandate is to protect US investors from fraud and risks.
Experts Question SEC’s Demands on Coinbase
As of March 2023, the SEC has issued over 120 enforcement actions against crypto companies and individuals for violating, among other charges, offering and selling of unregistered securities, misleading investors about the nature of their investments, and failure to register as a broker-dealer or securities exchange.
The SEC’s lawsuit against Binance and Coinbase accuses the exchanges of offering unregistered securities and failing to register as securities exchanges.
TuongVy Le, the present head of regulatory and policy at Bain Cap Crypto and a former SEC employee, believes that it is nearly impossible for Coinbase to register as a securities exchange, broker, or clearing agent. She argues that the regulator has not accused Coinbase of defrauding investors and that the demands placed on the exchange by the SEC are nearly impossible to fulfill.
Feature Image From Canva, Chart From TradingView