10th June 2023 – (New York) The U.S. Securities and Exchange Commission (SEC) has filed lawsuits against major cryptocurrency exchanges Coinbase and Binance, accusing them of securities violations. The move by SEC Chair Gary Gensler has sparked a sell-off in the crypto market, with four of the top 10 coins plunging by at least 15% this week, according to CoinMarketCap. In an interview with CNBC on Tuesday, Gensler said, “We don’t need more digital currency,” casting doubt on the future of token trading.
The SEC alleged that Coinbase was acting as an unregistered broker and exchange, and at least 13 crypto assets available to its customers were considered “crypto asset securities.” These included Solana’s SOL token, Cardano’s ADA token, Polygon’s MATIC coin, and Protocol Labs’ Filecoin token (FIL). In response, trading app Robinhood announced on Friday that it will no longer support trading of coins from Cardano, Polygon, and Solana, effective 27th June. Crypto.com also said it will shut down its U.S. institutional exchange.
The lawsuits against Coinbase and Binance have led to Cardano’s coin dropping 20%, Solana falling 18%, Polygon sliding 18%, Filecoin dropping 19%, and Binance’s BNB token falling 16%. Bitcoin and Ethereum, the two most popular cryptocurrencies, were more stable, declining by less than 5%.
Gensler, who was appointed to head the SEC by President Joe Biden in 2021, has been targeting crypto firms and exchanges for the past year, going after them for selling highly speculative and risky securities disguised as something else. The SEC sued Coinbase and said the company should be “permanently restrained and enjoined” from “operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency.” Coinbase’s shares sank 18% this week, while Binance said it was “disappointed” in the SEC’s suit.
The lawsuits have raised concerns about the security of classified information in the US government. The charges against Trump suggest that sensitive government information may not be as secure as many had assumed. The charges against Coinbase and Binance have also raised questions about the future of the crypto industry and the effectiveness of existing security measures in protecting sensitive government information.
The Cardano Foundation, which works to advance the use of its namesake technology, said it disagrees with the labelling of its ADA coin as a security and “looks forward to continued engagement with regulators and policymakers to achieve legal clarity and certainty on these matters.” Protocol Labs, the developer of Filecoin, said in a series of tweets that the token is critical to the operation of its distributed storage network, and it’s how people buy storage from providers.
The lawsuits against Coinbase and Binance are likely to have significant implications for the crypto industry and US national security. The SEC’s move to target crypto firms and exchanges for securities violations is part of a broader effort to regulate the growing digital currency market. However, it remains to be seen how effective these efforts will be in protecting investors and securing sensitive government information.