Bitcoin rallies above $27,000 after SEC sues Coinbase, alleging its an unregistered broker

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SEC Chair Gensler: We don't need more digital currency

Cryptocurrency prices rose Tuesday after the Securities and Exchange Commission sued crypto services provider Coinbase.

Bitcoin climbed 6.3% to $27,155.16, according to Coin Metrics, recovering its losses from the previous day after the SEC sued Binance. Earlier, it fell as low as $25,368.57, its lowest level since March. Ether gained nearly 5% to trade at $1,896.19.

On Tuesday, the SEC filed a lawsuit in New York federal court alleging that Coinbase has been acting as an unregistered broker and exchange. The agency demanded that the company be “permanently restrained and enjoined” from continuing to do so.

“If there’s a real value in these crypto tokens then compliance will build trust and the business model might change,” SEC Chair Gary Gensler said in an interview Tuesday with CNBC’s “Squawk on the Street.” “What we’re doing at the SEC is pro-innovation because the capital markets really don’t work.”

“There’s a lot of work here for the crypto field but we stand ready to work to get them into compliance,” he added.

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Bitcoin (BTC) bounces following SEC lawsuits against Binance, Coinbase

The complaint named several coins listed on Coinbase that could be considered “crypto asset securities” by the regulator, including popular coin Solana (SOL), which gained 3% after falling as much earlier. Cardano’s ada token, also named, gained 1.75% and Polygon’s Matic token was little changed.

The news came one day after the SEC alleged that Binance, the largest crypto exchange in the world by volume, and its co-founder, Changpeng Zhao, violated securities laws. Cryptocurrency prices fell Monday to their lowest levels since March following the complaint against Binance.

Binance Coin, a token used to pay transaction and trading fees on the Binance exchange, advanced more than 3% after it tumbled 9.5% on Monday.

U.S. regulators have been cracking down on crypto businesses in 2023. Since January, the SEC has charged Kraken, Genesis and Gemini Trust with offering unregistered securities to investors.

It also issued a Wells Notice to Coinbase earlier this year warning the company of potential securities charges.

Matt Hougan, chief investment officer at Bitwise Asset Management, called the Coinbase lawsuit “an important event that investors can look toward” speaking to CNBC Monday evening.

“The [SEC’s] next step in the Coinbase direction is probably a signal that we’re past this period of regulatory dark clouds or at least getting to the end of it,” he said.

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