Since June last year, the U.S. Securities and Exchange Commission (SEC) has sued Coinbase, the largest cryptocurrency trading platform in the United States, claiming that starting from 2019, Coinbase earned billions of dollars by illegally facilitating the sale of securities. They argue that cryptocurrencies should be considered securities and that Coinbase should be subject to their regulation.
Recently, U.S. District Judge Katherine Polk Failla ruled that the SEC can continue its lawsuit against Coinbase. Although a final decision has not yet been made, allowing the lawsuit to proceed is understood by many as an acknowledgment of the SEC's arguments by the court.
The SEC has heavily charged Coinbase with engaging in "unregistered sale and offering of securities," illegally operating exchanges, broker-dealer and clearing agency businesses. This involves core rules of cryptocurrencies, including whether they should be considered securities under regulatory oversight, and whether cryptocurrencies under regulation can continue to exist.
This decision is undoubtedly a heavy blow to Coinbase and other cryptocurrency participants who believe the SEC has no authority to regulate them, as they do not trade in securities and should not be subject to SEC regulation and control. Yet, the judge has taken a position opposite to theirs.
According to legal experts, this lawsuit is unlikely to end soon and is expected to escalate, potentially reaching the U.S. Supreme Court. The Supreme Court justices may then have to make a pivotal decision on the fate of cryptocurrencies, a process that could take several years or even a decade.
Regarding the lawsuit by the SEC, Coinbase is filled with confidence. Coinbase's Chief Legal Officer, Paul Grewal stated, "We are prepared for this and look forward to learning more about the SEC's internal views and discussions on crypto regulation."
However, this confidence has not been passed on to every investor. Following the judge's approval for the lawsuit to proceed, Coinbase's stock price suffered a significant decline, dropping 3.79% by the close of March 27th. Additionally, due to Bitcoin's volatility, cryptocurrency-related stocks have also been experiencing continuous fluctuations.
