In the aftermath of the U.S. Securities and Exchange Commission’s (SEC) shocking lawsuit against Binance, major cryptocurrencies such as Bitcoin and Ethereum have experienced a significant decline. This downturn coincides with the introduction of a potentially game-changing crypto bill in Congress. The combined effect has led to a massive $100 billion loss in market capitalization, raising fears among crypto traders of an impending crackdown by the SEC.
Coinbase Warning amid Crypto Price Crash:
Amidst this turmoil, concerns have emerged that the SEC’s lawsuit against Binance could set a precedent for a similar legal action against Coinbase, the largest U.S. cryptocurrency exchange that went public in 2021. Notably, the SEC has recently filed a lawsuit against Coinbase, alleging the exchange’s violation of rules by facilitating trading of unregistered securities on its platform.
Implications for Coinbase:
The repercussions of a potential SEC lawsuit against Coinbase could be severe, considering the exchange’s stock has already plummeted by over 80% since its market debut in spring 2021. Analyst Mark Palmer from Berenberg noted that approximately 37% of Coinbase’s net revenue could be at risk if the SEC targets the exchange’s crypto token trading and staking operations.
Foreseen Precedent and Coinbase’s Position:
Experts speculate that the SEC’s decision to pursue legal action against Binance first is strategically sound, given the exchange’s limited U.S. investor base and lack of a substantial lobbying arm in Washington, D.C. On the other hand, Coinbase has a massive domestic investor base and considerable lobbying influence, making it a more consequential target for the SEC. The anticipation of an SEC case against Coinbase has been present since March when the exchange disclosed receiving a Wells notice, indicating impending legal action.
The recent crypto market crash and the SEC’s lawsuit against Binance have sent shockwaves through the industry. The possibility of a similar lawsuit against Coinbase has raised concerns about the exchange’s future and potential financial implications. Traders and investors are closely monitoring these developments as the cryptocurrency market navigates uncertain regulatory waters.