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Operation Chokepoint 2.0 🆘
Coinbase v Gary, it's down to a dog fight now. Then there is Binance v SEC, Tai Chi v Operation Chokepoint 2.0. Is the crypto fight in the US heading to a climax? Cathie Wood keeps buying COIN.
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In a stunning turn of events, the Securities and Exchange Commission (SEC) has set its sights on not just one, but two major cryptocurrency exchanges. Just a day after filing a lawsuit against Binance, the SEC has now set its sights on Coinbase.💥
📛 Coinbase in the SEC's crosshairs
The SEC has accused Coinbase of failing to register as a broker, exchange, or clearing firm, despite playing these crucial roles in the cryptocurrency market. The agency alleges that many tokens on Coinbase are unregistered securities. But that's not all! The SEC also claims that Coinbase's staking program, which offers customers rewards for locking up their coins, violates securities laws. Talk about a double whammy! 🚫🔒
Here's where it gets interesting: Coinbase announced back in April 2021 that the SEC had approved its registration for a proposed public direct listing. So, how did Coinbase go from being SEC-approved to being slapped with a lawsuit?
💼 Coinbase Fires Back
Coinbase's Chief legal officer, Paul Grewal, expressed his disappointment, but also his lack of surprise, as the SEC decided to take legal action against Coinbase on the very day of their crucial congressional hearing.
“It’s disappointing, but not surprising, that the SEC has decided to bring legal action against Coinbase today, the day of our testimony before this committee’s critical hearing on creating a workable framework for digital asset regulation,” says Paul.
Brian Armstrong, the CEO of Coinbase, came out swinging in defence of his company and his confidence in Coinbase's position. Armstrong revealed that the SEC had reviewed Coinbase's business in 2021 and even allowed them to go public.
“In case it’s not obvious, the Coinbase suit is very different from others out there – the complaint filed against us is exclusively focused on what is or is not a security. And we are confident in our facts and the law,” Armstrong tweeted.
He highlighted that the SEC had reviewed Coinbase's business in 2021 and allowed them to become a public company, despite the agency's claims dating back to 2019. Armstrong also mentioned Coinbase's expansion of listed cryptocurrencies after going public, emphasising their goal of bringing in more assets.
🗣️ The Crypto Community Speaks
The crypto community is buzzing with different opinions on the SEC's actions. Crypto podcaster Scott Melker called the claims against Coinbase "nonsense," while lawyer Joe Carlasare stated that the SEC's approval of Coinbase's registration statement is separate from the alleged unlawful activity.
📜 Ten States Join the Fray
As if the SEC's lawsuit wasn't enough, Coinbase now faces a show cause notice issued by ten US states. Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin are all demanding answers from the exchange. Coinbase has been given 28 days to prove why it shouldn't face a cease-and-desist order.
The stakes just got higher.
⛹️ Crypto don't give up easy #bounceback
TTD Binance 🆘
Now let's not forget that the SEC and Binance are going head-to-head in a legal showdown that has set the crypto world on fire!
The SEC has slapped Binance with a lawsuit.
They have even filed a motion to freeze all crypto held by Binance.US, the holding and operating firms for Binance exchange, with a temporary restraining order.
And bam! The debate between the crypto industry's "Tai Chi" approach to regulation and the alleged "Operation Chokepoint 2.0" by US regulators is back in action!
Now, what's this "Tai Chi" approach? Ask Forbes.
And "Operation Chokepoint 2.0" - some folks believe that US lawmakers and regulators are teaming up to put a chokehold on the crypto industry's growth. They want to control it all, from A to Z.
Now, the $410 Million
Binance.US has generated $410 Million in revenue and $225 Million in gross profit since its launch, according to financial accounts detailed by an SEC accountant. The majority of the revenue and gross profit was made in 2021, with the exchange netting $265 Million in revenue that year. The accounts cover the period from 2019 to April 2023 and refer to BAM Trading Services, the entity behind the exchange.
TTD Blockquote 🔉
Gary Gensler, SEC chair and the crypto slayer 🥷
“We don’t need more digital currency.”
In a CNBC interview Gensler went on to criticise crypto exchanges, claiming their entire business model is built on non-compliance. He compared their operations to a wild mix of functions, as if the New York Stock Exchange suddenly started running a hedge fund. Talk about mixing things up!
According to him, we already have digital currency.
It's called the US Dollar, the Euro, the Yen.
Apparently, they've secretly been digital all along.
Touché Mr. Gensler 💵
TTD Numbers 🔢
Cathie Wood's ARK funds invested $21.64 Million to acquire 419,324 shares of Coinbase stock on June 6.
Cathie Wood’s faith 💸
SEC lawsuit. Slip on the charts. None of it matters. Every dip is a buy. COIN
They now hold a total of $647 Million in Coinbase stocks, with a cost ranging between $243-254 per share.
TTD Surfer 🏄
In light of SEC lawsuit against Binance, South Korea's Financial Service Committee (FSC) is reviewing acquisition of local crypto platform Gopax.
Robinhood could delist the tokens named in lawsuits by the SEC against Binance and Coinbase, a representative tells a Congressional committee.
US lawmakers urge IRS, Treasury to hurry crypto tax rules, asking for the prompt release of proposed regulations on reporting requirements.
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So long. OKAY? ✋
The Token Dispatch is a daily newsletter that takes you on a 4-5 minute drive through the wild west of the Crypto World. Daily in your email inbox @13:00 GMT. Almost always.