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SEC sues Coinbase, Binance

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June 6, 2023

The Securities and Exchange Commission has sued Coinbase and Binance in back-to-back lawsuits. With Coinbase, the SEC claims it was acting as an unregistered broker and exchange, according to a report by CNBC.

With Binance, the SEC claimed it was offering unregistered securities such as its BNB token and BUSD stable coin and that a staking service it offered violated securities laws. Much like Coinbase, SEC also accused Binance of failing to register as a broker and exchange and that it comingle customer funds, which allegedly caused the downfall of the FTX cryptocurrency exchange in 2022, according to a report by Business Insider.

The SEC has consistently argued that cryptocurrencies are securities and that cryptocurrency firms should follow registration rules, whereas Coinbase and other cryptocurrency exchanges have argued against that interpretation.

Following the lawsuit against Binance, Coinbase stock dropped 10% and bitcoin and ether's prices also fell by as much as 5%.

Last year, FTX went through a liquidity crisis and filed by bankruptcy, locking out at least one million users from their cryptocurrency funds. The company's founder Sam Bankman-Fried was later arrested on suspicion of fraud, wire fraud conspiracy, securities fraud and money laundering.