Coinbase Closes 9% Down As Crypto Industry Reels From Binance Lawsuit
The shares of the cryptocurrency exchange Coinbase closed 9% in the red on Monday, June 5th. A similar price movement was seen across multiple cryptocurrencies, as well as the other major digital assets-related stock, Microstrategy. The sharp decline was triggered by a lawsuit filed by the SEC against Binance.
Crypto Markets Decline Shaprly After Binance Lawsuit is Unveiled
This Monday, the shares of Coinbase, the largest publicly-traded cryptocurrency exchange, closed 9% down. The decline came quickly after it was announced that the Securities and Exchange Commission has filed a major lawsuit against Binance and its CEO, Changpeng Zhao.
While Coinbase was particularly hard hit—likely because it was also threatened with an enforcement action by the Commission—much of the digital assets industry saw a similar decline. MicroStrategy, the other major cryptocurrency-related company, similarly closed about 9% in the red.
Most major cryptocurrencies saw a similar decline following the news. Bitcoin fell sharply on Monday from approximately $26,500 to $25,500 while ETH dropped more than 9% to just above $1,800. Binance’s BNB was similarly affected declining nearly 10% and falling to around $276.
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SEC Sues Binance and CZ
The across-the-board fall of prices in the cryptocurrency industry was seemingly singularly caused by an SEC lawsuit targeting Binance and its CEO, Changpeng Zhao. The lawsuit alleges numerous wrongdoings on the part of the exchange including misleading investors, failing to prevent US-based customers from accessing the international platform, offering unregistered securities, and even a degree of market manipulation.
Binance responded strongly to the complaint stating it will fight vigorously to defend itself from the regulator. It also expressed its disappointment with the SEC as it claims to have worked hard to engage the watchdog in good faith dialogue. A similar criticism was leveled at the Commission by various other players in the industry, most notably Coinbase after it had been warned of a likely enforcement action.
The crypto community reacted strongly to the news mostly expressing support for Binance. Changpeng Zhao, the exchange’s CEO, called on the industry to unite to better push for a more sensible regulatory framework. Cardano’s Charles Hostinson assessed the complaint as “the next in a series of steps to implement chokepoint 2.0 in the United States.”
Do you think there is an actual “operation chokepoint 2.0” at play in the US with regard to the crypto industry? Let us know in the comments below.