DOS Won’t Hunt: SEC Sues Crypto Exchanges Coinbase and Binance

Some courtroom conflicts may be inevitable.

Last Monday, the Security and Exchange Commission filed lawsuits against cryptocurrency exchanges Binance and Coinbase, citing a variety of different charges tied to the theme that they had allegedly broken rules on securities.

The suits are not identical yet share the SEC’s stance of wanting to classify cryptocurrencies as securities and subject to its rules. The charges leveled against Binance include allegedly letting “high-value” customers in the United States use its main international exchange, which was banned in this country in 2019. There is a Binance US exchange, but the SEC claims some domestic customers were given access to the international version.

Coinbase is no stranger to the SEC’s complaints having faced increasing scrutiny from the regulator in the preceding months. For its part, Coinbase was actually getting ready to testify before Congress on the need for clarity in the regulation of crypto in the US but then the SEC woke up and chose litigation by launching its lawsuits.

There are some diametrically opposed perspectives at play here, with regulators insinuating that the crypto scene knowingly defies its authority while crypto stakeholders say these are intimidation tactics fueled by government overreach.

This will likely be a messy fight -- a slobberknocker in the words of wrestling commentator Jim Ross -- because there are deeply entrenched interests at play, and no one seems ready to back down.

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