back to article Coinbase, don't feel left out. SEC has a lawsuit for you, too

It's been a bad week for the cryptocurrency world. Yesterday the US Securities and Exchange Commission sued the world's largest crypto exchange, Binance, alleging 13 counts of fraud and other financial crimes. Today, the watchdog is coming down on the second largest exchange, Coinbase, for similar reasons.  And it's only …

  1. Michael Hoffmann Silver badge
    Joke

    Line up in order

    According to one wit on another site, the SEC is going through them alphabetically.

    Binance, Coinbase.... Dogecoin, Ethereum (*)

    (*) yes, I know those last are the coins not the exchanges, work with me here!

    1. tony72

      Re: Line up in order

      They started with Ripple though ...

  2. Claptrap314 Silver badge

    No jursidiction

    Coin is not a security. It is a commodity.

    Of course, the crypobros have been claiming it is a security to make it more interesting. Doesn't change the reality.

    1. Anonymous Coward
      Anonymous Coward

      Tricky

      For the OG coins that was more clearly true, but the current ones use very different architecture. Smart contracts put Ether and many of the other middle generation coins on mixed footing, and the newer proof-of-stake systems are of untried and untested legal status in the US.

      Huge tracks of the DeFi tokens, stable-coins, DAOs, and bridges are almost certainly acting as unregistered securities in the US and should have been expecting the knock on the door. I expect that many have been waiting for this to pull the ripcord on their "exit fraud" or rug pull.

      Can't say how this turns out but I'd expect a bunch more people find out what being a bag holder feels like.

    2. MachDiamond Silver badge

      Re: No jursidiction

      "Coin is not a security. It is a commodity."

      It's not a commodity either. It's a scam. A very elaborate scam that hasn't yet been quashed.

      The lawsuits don't come from the crypto directly, but from the entirety of the operation. If they are doing things that fall under regulations for that sort of activity, they have to be registered and follow accepted practices to prevent money laundering, fraud and a whole host of financial crimes.

      Forget trying to make money day-trading virtual Monopoly money and just buy land. Even if things go completely to shit, you can still pitch a tent on your own property to keep the rain off.

    3. jmch Silver badge

      Re: No jursidiction

      Without knowing the esoteric details of every coin or indeed the detailed workings of the financial systems but...

      I think Proof-of-stake edges any coin into security territory, similair to a company share giving voting power on a company's actions. Proof-of-work avoids this and is more likely to be considered a commodity. And any coin implementing smart contracts could, depending on the nature of the contract, be considered a security. And the flexibility to have just the *possibility* of creating a security-like contract is enough for the legal system to consider the whole coin system as a security.

      Given that Bitcoin's main features are simplicity and proof-of-work, I would consider that a commodity. Pretty much every other major coin has added differentiating gimmicks that veer them into security territory (surely gray areas abound). In any case, Binance, coinbase etc are exchanges that manage the trades of all the major cryptocurrencies / coins, so even if 1 of the cryptocurrencies is considered a security (which is pretty much guaranteed), SEC has jurisdiction.

    4. tony72

      Re: No jursidiction

      The SEC and the CFTC have both been claiming jurisdiction over crypto, and making conflicting claims over the classification of such as securities or commodities. And we are about to have several very expensive legal proceedings in part to determine exactly that, since the SEC's allegations of unregistered securities dealings hinge on whether the assets in question are indeed securities or not. But hey, let me call the judge and tell him to throw the cases out and not to waste his time, because Claptrap314 has declared that they are commodities.

    5. spireite Silver badge

      Re: No jursidiction

      Definitely not a commodity

      Its 'cash vapourware' pure and simple.

      It doesn't exist, it's a figment of peoples imagination to think that it has 'value'.

      There is irony in claiming its a security because cryptocurrencies couldn't be further away from security in any aspect.

  3. simonlb Silver badge
    Stop

    Nice Ponzi Scheme You Have Here...

    Be a shame if something happened to it because you didn't have 'insurance.'

  4. Anonymous Coward
    Anonymous Coward

    Of course new rules aren’t needed

    The existing criminal fraud laws should do just fine.

  5. Philip Stott
    WTF?

    Eh?

    Am I missing something, or do the final 4th and 3rd paragraph have SEC boss saying mutually exclusive things:

    Gensler has insisted for a while that such rules for cryptocurrencies aren't needed.

    "The investing public has the benefit of U.S. securities laws. Crypto should be no different, and these platforms, these intermediaries need to come into compliance," Gensler said on telly news today

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