Coinbase to face US lawsuit over unregistered securities sales
What's the story
Coinbase, a prominent cryptocurrency exchange, is preparing to fight a lawsuit filed by the US Securities and Exchange Commission (SEC).
The lawsuit accuses Coinbase of unregistered securities sales.
US District Court Judge Katherine Polk Failla of the Southern District of New York, has given approval for the case to proceed.
Judge Failla rejected Coinbase's attempt to dismiss the SEC's complaint, stating that despite being a recent concept, cryptocurrencies fall within existing securities regulations.
Implications
SEC's victory could influence crypto regulation
This lawsuit represents a significant triumph for the SEC, which has been pushing for cryptocurrency companies to comply with federal securities laws.
The agency's chairperson, Gary Gensler, who has an academic background in digital assets from MIT, has expressed his desire for cryptocurrencies to be regulated by the SEC.
This case could potentially be a turning point in the SEC's ongoing efforts to ensure cryptocurrency compliance, and may influence its decision on classifying Ether as a security.
Market reaction
Potential impact on the cryptocurrency industry
The ruling could have a significant impact on the cryptocurrency industry, potentially leading to increased scrutiny from financial regulators for non-compliant firms.
Despite popular belief that current federal law is not equipped to regulate cryptocurrencies due to their unique nature, this ruling may set a precedent for enhanced regulation.
In response to this development, Coinbase's shares experienced a 2.5% drop on Wednesday, with prices around $262 at the time of writing.