The SEC Is Suing Everyone Now

Coinbase is the next in line, but they were prepared

Author

Nathaniel Whittemore
June 07, 2023

The Breakdown First Five - Wednesday June 7, 2023

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

Prompt: “A frenzy of lawsuits”

5. The Big Freeze - It’s Getting Nasty

The Binance lawsuit got followed by a nasty chaser, with the SEC filing a draft order to freeze the exchange’s assets. Among other things, the order demands Binance.US assets be seized and any Crypto being custodied offshore be returned to the US. If the SEC succeeds in their application Binance international assets will be unaffected and Binance.US will be allowed to return assets to customers, but this could be the death knell for Binance.US.

4. The Enforcement Bounce

Markets rebounded hard yesterday on news that Coinbase had been sued. Bitcoin raised its head about $27,000 before losing the level, while some of the altcoins targeted by the SEC saw a modest bounce. Some said market participants expected the lawsuit, so it was already priced in. Bitcoiners thought this lawsuit validates their one true Crypto-asset thesis. Others just saw defiant degens stepping in to slurp the dip.

3. “We don’t need more digital currency”

Taking a victory lap, Gensler appeared on Squawk Box to explain that we don’t need Crypto because the US dollar is already digital. Gensler repeated that exchanges just need to come in and register, despite Coinbase asking for guidance on how to do so 30 times. Critics pointed out that it’s really not up to him whether Crypto is needed, that’s more a job for elected officials. Hope you’re feeling protected as an investor by this week’s SEC rampage.

2. Small Wins

In light of Gensler’s public comments that we don’t need Crypto rules, the Court has ordered the SEC to explain itself. When Coinbase asked for a decision on rulemaking, the SEC was adamant that they hadn’t made up their mind yet and could drag this out for a decade. The Judge gave the SEC a week to put together a letter explaining this contradictory stance.

1. SEC sues Coinbase

Tokens. Staking. Self Hosted Wallets. All illegal according to Gary Gensler’s SEC. The second big lawsuit this week goes after Coinbase for operating an unregistered exchange, brokerage and clearing house along with 13 tokens being labeled unregistered securities. Calling for softer penalties than the Binance lawsuit, Coinbase will continue to operate as normal while fighting it out.

BONUS: The Clap Back

In case you were wondering whether this was a surprise to Coinbase — it was not.

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Thanks for reading -NLW