The U.S. Securities and Exchange Commission (SEC) recently filed suits against Coinbase and Binance, but the messaging surrounding the suits seem reactive, political, and, frankly, just beneath the bluster, weak, according to The Node newsletter. The SEC is trying to put Coinbase and Binance into the same bucket as the frauds of 2022, such as Luna, Celsius, and FTX, but the SEC’s core claim against Coinbase is that the exchange has made calculated business decisions to make crypto assets available for trading in order to increase its own revenues, which are primarily based on trading fees from customers.
The SEC’s charges against Coinbase and Binance are being represented as protecting investors against some manipulative, horrifying predator, but in reality, the suits represent a paternalistic attempt to keep people from making what the SEC views as the wrong kind of investments. SEC Director of Enforcement Gurbir S. Grewal alleges that Coinbase’s calculated decisions allowed it to earn billions…at the expense of investors by depriving them of the protections to which they were entitled.
The SEC appears to think crypto exchanges are exploiting their customers simply by allowing them to do anything so foolish as buying cryptocurrency under their own free will. SEC Chair Gary Gensler advanced this agenda on CNBC, declaring that we don’t need more digital currency, we have digital currency. It’s called the U.S. dollar. It’s called the euro. It’s called the yen. They’re all digital right now.
The SEC’s suit against Coinbase in particular hinges on the moral presumption that cryptocurrency is inherently fraudulent and valueless. This allows them to paint Coinbase CEO Brian Armstrong as the same as Sam Bankman-Fried in the public eye, despite the fact that the first has run a stable and trustworthy service for a decade, and the second was an incompetent boob with zero moral compass or basic mathematical ability.
The SEC’s charges against Coinbase and Binance are being misrepresented as a do-over for the SEC’s and Gensler’s FTX missteps, but that doesn’t mean they’re actually the same thing, and misleading the public to that effect may wind up undermining Gensler’s position in the long run.