By George Ward
Cryptocurrency exchanges have been facing increased regulatory scrutiny, and the latest victim of this is Bittrex. With Bittrex now in the crosshairs of the SEC, many in the crypto community wonder if Coinbase will be next.
Coinbase has long been among the world’s most popular and trusted cryptocurrency exchanges. However, as the SEC continues to crack down on unregistered securities, there are concerns that Coinbase could be next.
These concerns were recently highlighted by a former SEC official, who made a shocking prediction about Coinbase. He claims that Coinbase could face a similar lawsuit to Bittrex soon.
Is Coinbase Next?
On Monday, Bittrex, a popular crypto exchange platform, received a lawsuit from the US Securities and Exchange Commission (SEC). The US SEC accused the Seattle-based crypto exchange of violating securities laws by not registering with the agency in various regions.
As a result of this development, a well-respected ex-SEC official suggested that another leading US exchange might face similar accusations amid the increasing regulatory crackdown on crypto exchanges by the financial watchdog across the nation. The US financial regulatory body has recently been exerting financial securities regulatory guidelines on several small and large-scale cryptocurrency firms, particularly crypto exchanges.
The watchdog has taken measures such as filing legal action against crypto exchanges and stopping certain crypto services, including yield-generating products and lending activities provided by trading platforms. Nevertheless, there have been criticisms regarding the US SEC’s invasive investigations and the lack of clear regulatory guidelines surrounding cryptocurrencies.
Meanwhile, John Reed Stark, a former official of the US SEC who previously held the position of Chief at the Office of Internet Enforcement, has predicted that Coinbase, another major crypto exchange, could be the next to face the negative impact of the SEC’s current anti-crypto campaign. The crypto exchange headquartered in California has made a public statement denouncing the recent actions of the US SEC.
It also called for implementing clearer cryptocurrency regulations instead of enforcing the existing ones. According to reports, the company stated that complying with the US SEC’s regulations would mean ceasing all of its operations.
Cryptocurrency Exchange Faces Lawsuit For Breaking Investor Protection Laws
Recently, Gary Gensler, the head of the US SEC, has warned cryptocurrency exchanges such as Coinbase about the possibility of violating US financial laws because they permit the trading of digital assets that should have been regulated as securities. Hence, he urged these companies to become registered as securities exchanges and separate any activities that may cause conflicts of interest in their compliance with US SEC regulations.
In March 2023, the regulatory organization conveyed a Wells Notice to Coinbase, indicating that it intends to file a lawsuit against the firm for purportedly breaking various laws designed to safeguard investors. Ultimately, the recent lawsuit against Bittrex and the ex-SEC’s prediction about Coinbase highlights the need for clarity regarding regulating the cryptocurrency industry.
While this may cause short-term disruption, it is ultimately a positive step toward creating a safer and more trustworthy market for digital asset players. As for Coinbase, only time will tell if they will be the next exchange to face a lawsuit from the US’ foremost financial regulator.