Two significant cryptocurrency exchanges, Binance.US and Coinbase, have been sued by the U.S. Securities and Exchange Commission (SEC), who claim they broke securities laws.
Case brought by the SEC against Binance.US asserts that the exchange failed to register as a securities exchange with the SEC and had permitted trading of unregistered securities by US citizens. In its action against Coinbase, the SEC claims that the exchange’s staking-as-a-service scheme amounted to the selling of unregistered securities.
The implications of the SEC’s lawsuits
The cases filed by the SEC are the most recent in a line of steps taken by the organization to control the cryptocurrency market. The SEC has taken several enforcement proceedings against cryptocurrency companies in recent years and has published a number of advice letters on how the securities laws relate to cryptocurrencies.
The SEC has filed complaints against Coinbase and Binance.US, which are noteworthy because it is the first time the organization has done so against a big cryptocurrency exchange. The cases may have a deterrent effect on the bitcoin market and may result in further SEC enforcement actions.
The SEC’s legal actions against Coinbase and Binance.US are particularly significant because they raise critical issues about the oversight of cryptocurrencies. Many cryptocurrencies, according to the SEC, are securities and as such are governed by the securities laws. The bitcoin sector has countered this, though.
Here is a more thorough examination of the charges made against Binance.US and Coinbase by the SEC.
Binance.US
The SEC asserts that Binance.US did not register as a securities exchange with the SEC. Additionally, the SEC asserts that Binance.US has permitted American citizens to trade unregistered securities.
Because it enables users to trade cryptocurrency, which the SEC regards as securities, the SEC asserts that Binance.US is a securities exchange. Additionally, the SEC claims that Binance.US has made it possible for Americans to trade cryptocurrencies, which is against the law given that Binance.US is not registered with the SEC as a securities exchange.
Coinbase
Through its staking-as-a-service offering, Coinbase is accused by the SEC of selling unregistered securities.
Staking is a technique that allows cryptocurrency owners to profit by locking up their money and assisting with transaction verification on a blockchain network. Users can stake their coins and earn rewards through Coinbase’s staking-as-a-service scheme without having to manage their own nodes.
Coinbase’s staking-as-a-service product is a security, according to the SEC, because it allows users to share in a company’s profits. Coinbase is accused by the SEC of failing to register its staking-as-a-service business with the SEC as a security, among other things.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any service.
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