The SEC lawsuits against Binance and Coinbase are not the same.
Sure – they are two of the largest and most popular exchanges worldwide.
Sure – the dates the charges were formally announced were separated by approximately 24 hours.
But there are several differences, astutely outlined in the article below.
To summarize:
The SEC accuses Binance of knowingly co-mingling funds – essentially fraud – similar to the FTX, SBF, and Alameda debacle. They also directly name CZ in the lawsuit.
Coinbase is not charged with fraud. Rather, the SEC lawsuit states that Coinbase is operating without a license. The SEC just wants Coinbase to “register” itself. Coinbase alleges that is has been trying to “register” but there aren’t methods available to them to do so.
Oh, and, the SEC does not like Coinbase’s staking program. (I earn “rewards points” or “cashback” with all of my other credit cards and bank accounts. Anyhoo…)
To add some further important background info:
Coinbase is a US based company that has been begging for clarification on digital asset rules. They are already traded on the stock market, and as such have already proven their willingness to jump through hoops, work with regulators, be transparent with their book-keeping, and tackle mountains of required paperwork.
Binance won’t even claim to have a headquarters in ANY specific country.
Gary Gensler, the head of the SEC, had offered to be an advisor to Binance, back when he was a Professor in blockchain tech at MIT PRIOR to being involved with the SEC. The CFTC (who typically undertakes very little legal action) went after Binance before Gensler.
Coinbase was issued a Wells notice (an indicator of planned legal action from the SEC) 3 months prior to the actual charges. They seemed flabbergasted at the time. They publically asked why the SEC allowed them to be listed on the stock exchange if they thought what is was doing was illegal. A very good question which has gone unanswered.
It is unclear if Binance received a Wells notice. We do know that PAXOS, which is involved in issuing the Binance-related stablecoin, did receive one several months prior to the official action.
Also of note, the SEC’s lawsuit against Coinbase directly names over 10 other digital assets it views as securities. Perhaps because the SEC is going after Coinbase because they cannot directly penalize Cardano, Axie, Solana, Cosmos, Polygon et al on a global scale.
Conclusion:
There is a sense that the action against Binance is overdue (perhaps due to the possible conflict of interest being unveiled), while the action against Coinbase feels misplaced.
This is looking more and more like a major 2024 election cycle issue.
