Illustration: Coinbase, June 6, 2023, Suqian, Jiangsu Province, China. (Photo credit CFOTO/Future Publishing via Getty Images)
The U.S. Securities and Exchange Commission alleges that Binance and Coinbase Global (NASDAQ: COIN) violated various securities rules regarding cryptocurrency activities.
The lawsuit, filed Tuesday morning, inspired Twitter brass — co-founder Jack Dorsey and owner Elon Musk — to share thoughts on the matter.
Dorsey, who is the CEO of Block, retweeted a user who shared a deleted tweet from Coinbase CEO Brian Armstrong.
“Ripple, Stellar, and Altcoins are all a distraction. Bitcoin is way too far ahead. We should be focused on bitcoin and sidechains,” Armstrong previously said on Feb. 23, 2015.
Dorsey shared the “100” emoji, indicating that he’s in agreement with the user.
Musk replied to Dorsey with “Doge ftw,” highlighting his favorite meme coin Dogecoin (CRYPTO: DOGE).
Why is it important? The SEC is suing Coinbase for operating as an unregistered exchange, broker and clearing agency.
The SEC also accused Coinbase of failing to register its crypto asset staking-as-a-service program. Coinbase has made billions of dollars since 2019 through the unlawful operation of helping users buy and sell crypto asset securities, the SEC says.
Coinbase shares fell Tuesday in response to the recent accusations.
The value of many leading cryptocurrencies were also down, including Bitcoin (CRYPTO: BTC), which was trading flat on Tuesday and down 6.2% in the last seven days. Bitcoin remains a key part of Coinbase’s company model. The first quarter represented 32% of trading volume.
Ethereum (CRYPTO: ETH) represented 24% of trading volume in the first quarter. Both of these figures were down from the fourth quarter, as more investors were trading cryptocurrency outside of the two leading coins.
Dogecoin is down 5.7% over the last seven days, but saw a slight uptick in price action after Musk’s tweet.
Coinbase was previously served with a Wells Notice and has been battling the SEC for some time over clarity on crypto regulations.
The crackdown on cryptocurrencies outside of Bitcoin could force the company to focus less on growth initiatives like staking and more on the leading cryptocurrencies.
COIN Price Action: Coinbase shares are down 14% to $50.51 on Tuesday versus a 52-week trading range of $31.55 to $116.30. Shares are up 50% year-to-date in 2023.
Produced in association with Benzinga
Edited by Jessi Rexroad Shull and Kyana Jeanin Rubinfeld
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