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SEC sues Coinbase, one day after suing Binance
Posted on 6/6/23 at 8:01 am
Posted on 6/6/23 at 8:01 am
quote:
NEW YORK (Reuters) -The U.S. Securities and Exchange Commission on Tuesday sued Coinbase Inc, the largest U.S. crypto asset trading platform, accusing it of illegally operating without having first registered with the regulator.
In a complaint filed in Manhattan federal court, the SEC said Coinbase has since at least 2019 operated as an unregistered broker by handling cryptocurrency transactions, evading the disclosure requirements meant to protect investors.
The SEC also said Coinbase operated as an unregistered broker through Coinbase Prime, which routes orders to Coinbase's platform and other platforms, and Coinbase Wallet, which lets investors access liquidity outside Coinbase's platform.
"Coinbase's alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection," SEC Chair Gary Gensler tweeted.
Shares of Coinbase fell 15.9% in premarket trading aftr the lawsuit was filed. Coinbase did not immediately respond to a request for comment.
The SEC sued Coinbase in Manhattan federal court, one day after the regulator sued Binance, the world's largest cryptocurrency exchange, and its founder Changpeng Zhao.
LINK
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Posted on 6/6/23 at 8:04 am to stout
Hasn't Coinbase consistently asked for regulatory declaration about crypto in this space? And since the regulators would never make the call, Coinbase couldn't behave with any regulatory compliance?
Posted on 6/6/23 at 8:05 am to SlowFlowPro
Correct which makes this whole thing BS
Posted on 6/6/23 at 8:12 am to stout
so will this actually affect anyting for the average joe user or is it just a shock headline?
Posted on 6/6/23 at 8:13 am to stout
Agree. What’s the SEC play here?
Posted on 6/6/23 at 8:42 am to SlowFlowPro
They've been asking for new rules because they don't think crypto coins are securities. SEC thinks they are, so the rules are very clear on what they have to do to be in compliance. SEC now suing them for not being in compliance.
I find the probability that coinbase can argue all of the hundreds of coins they exchange don't qualify as security as zero. So Goodluck coinbase, they only need to prove one coin is a security.
I've never owned longterm or understood anything other than bitcoin, its the only crypto that makes sense to me as a store of value, other coins are CLEARLY securities that support private companies. Gensler himself, in the past, has indicated bitcoin stands alone and maybe a couple other coins. Could be a good thing for bitcoin to drop the axe on the shitcoin world. Probably not though.
I find the probability that coinbase can argue all of the hundreds of coins they exchange don't qualify as security as zero. So Goodluck coinbase, they only need to prove one coin is a security.
I've never owned longterm or understood anything other than bitcoin, its the only crypto that makes sense to me as a store of value, other coins are CLEARLY securities that support private companies. Gensler himself, in the past, has indicated bitcoin stands alone and maybe a couple other coins. Could be a good thing for bitcoin to drop the axe on the shitcoin world. Probably not though.
This post was edited on 6/6/23 at 8:50 am
Posted on 6/6/23 at 8:44 am to Pendulum
The casino is closing. Cash in your chips, take your USD and go home.
Posted on 6/6/23 at 8:44 am to Pendulum
quote:
I've never owned longterm or understood anything other than bitcoin, its the only crypto that makes sense to me as a store of value, other coans are CLEARLY securities that support orivate companies. Gensler himself, in the past, has indicated bitcoin stands alone and maybe a couple other coins. Could be a good thing for bitcoin to drop the axe on the shitcoin world. Probably not though.
Posted on 6/6/23 at 8:53 am to Pendulum
quote:
They've been asking for new rules because they don't think crypto coins are securities. SEC thinks they are
When did the SEC offer this regulatory guidance publicly?
Serious question. After a quick google search I see March 2023.
quote:
bitcoin, its the only crypto that makes sense to me as a store of value,
It's volatility needs to decrease dramatically before it can be declared a real store of value. That volatility leads people to use it as an investment tool much more commonly than a store of value, which moves it clearly into security territory.
This post was edited on 6/6/23 at 8:55 am
Posted on 6/6/23 at 9:00 am to SlowFlowPro
Well Gary Gensler just said on CNBC that most coins are securities, so the compliance rules are already established.
I'll leave the second part alone, it's a dead horse around these parts.
I'll leave the second part alone, it's a dead horse around these parts.
Posted on 6/6/23 at 9:01 am to Pendulum
quote:
Gary Gensler just said on CNBC that most coins are securities
But when did they make this announcement? Any advisory opinions on this prior to 2023?
Posted on 6/6/23 at 9:05 am to SlowFlowPro
What is the significance of when they started stating this if they are stating it now? Just to paint the picture that coinbase got screwed? Or is there something I'm missing.
This post was edited on 6/6/23 at 9:32 am
Posted on 6/6/23 at 9:06 am to Pendulum
quote:
They've been asking for new rules because they don't think crypto coins are securities. SEC thinks they are, so the rules are very clear on what they have to do to be in compliance. SEC now suing them for not being in compliance.
Bingo, Gensler has stated this multiple times in interviews over the last few years.
Probably does not hurt that former Coinbase employee just settled with the SEC on an insider trading case and violating securities laws. As well as another lawsuit where they settled to admitting to wash trading.
Guessing those employees have been working out the details to get favorable outcomes.
Coinbase was also given a show cause in ten states for their staking program
quote:
Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin
They have 28 days to come in compliance with securities laws or will have to cease offering staking.
Posted on 6/6/23 at 9:08 am to Pendulum
quote:
What the significance of when they started stating this if they are stating it now?
Bureaucracies have a lot of power with their interpretations and the basis of this is that they're supposed to make these public for guidance purposes. If they're not giving the public this information, but then suing/prosecuting actors for violating this secret standard, that's completely fricked.
quote:
Just to paint the picture that coinbase got screwed?
This is way bigger than Coinbase, potentially.
Posted on 6/6/23 at 9:14 am to SlowFlowPro
quote:
But when did they make this announcement? Any advisory opinions on this prior to 2023?
The SEC has never said they were not securities. So nothing would need to be announced. He has repeatedly said that crypto tokens fall under these securities laws. Only people asking for new regulations are crypto companies.
quote:
Gensler has said repeatedly that many crypto tokens fall under securities laws given how they are used and that most tokens, other than Bitcoin and maybe Ethereum, should register as securities. Additionally, any platform trading these tokens ought to register as an exchange.
Yahoo Finance July 2022
Posted on 6/6/23 at 9:16 am to UltimaParadox
quote:
many crypto tokens
quote:
other than Bitcoin and maybe Ethereum
a. There is no real guidance
b. He contradicted his rhetoric by not including BTC or ETH as securities
Posted on 6/6/23 at 9:22 am to stout
Meanwhile CFTC maintains crypto is a commodity.
Posted on 6/6/23 at 9:24 am to SlowFlowPro
I am sure the truth lies in the fact that the SEC definition of security would materially harm the business of Coinbase, since staking was their only growth metric.
Otherwise I think they would have worked a deal with the SEC to come in compliance.
Considering there has already been multiple cases against coinbase that has been won in the SEC's favor. Good luck to them
Otherwise I think they would have worked a deal with the SEC to come in compliance.
Considering there has already been multiple cases against coinbase that has been won in the SEC's favor. Good luck to them
Posted on 6/6/23 at 9:36 am to The Baker
quote:
Meanwhile CFTC maintains crypto is a commodity.
Not sure this is anything to get your hopes up about, just recently the CFTC said this
quote:
"There's just a lot of fraud in the space," Goldsmith Romero said at a white collar crime conference at the New York City Bar Association. "There's just no way we can police all the fraud, but we've got to do something."
quote:
Goldsmith Romero pushed back on the idea there was a "turf war" between the CFTC and the Securities and Exchange Commission over regulating crypto, but acknowledged that many of the industry's products are new and the agencies were "still trying to figure it out."
quote:
She also said crypto companies should not view the CFTC as a potentially friendlier regulator than the deeper-pocketed SEC. "I don't like the idea that somehow the CFTC is light touch," Goldsmith Romero said. "'Light touch regulator' would never be written on my tombstone."
Reuters source
Sounds like they are both about to go hard after all the exchanges.
This post was edited on 6/6/23 at 9:37 am
Posted on 6/6/23 at 9:42 am to SlowFlowPro
quote:
SlowFlowPro
How does Bitcoin pass the Howey test?
1. Is there an investment of money? Yes
2. Is it in a common enterprise? No
3. Does if have an expectation of profit? Maybe It can be used as such but most real world users are using for remittance and there is no expectation of profit.
4. Is it derived from the efforts of others? No Running my own minor and node. No need for others.
In order for it to be a security, it must meet ALL 4.
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