Crypto
Coinbase, facing SEC lawsuit, says regulator lacks police power over crypto
/cloudfront-us-east-2.images.arcpublishing.com/reuters/MCGLG77BT5K4VOT5Y7YJLQ5BVM.jpg "Coinbase, facing SEC lawsuit, says regulator lacks police power over crypto")
NEW YORK, June 29 (Reuters) – Coinbase (COIN.O), the largest U.S. cryptocurrency platform, said it will ask a judge to dismiss the U.S. Securities and Exchange Commission lawsuit claiming it broke the law by failing to register its business.
In a letter filed just before midnight on Wednesday in Manhattan federal court, Coinbase said the SEC has no authority to pursue civil claims because assets trading on its platform are not “investment contracts,” and thus not securities.
“The SEC can pursue its claims only if the tokens and staking services it has identified are ‘securities,’” Coinbase said. “They are not.”
Spokespeople for the SEC did not immediately respond to requests for comment on Thursday.
The SEC sued Coinbase on June 6, saying it made billions of dollars acting as a middleman including by trading at least 13 crypto assets, or tokens, such as Solana, Cardano and Polygon that should have been registered as securities.
Coinbase was also sued over a “staking” program where it pools crypto assets to support activity on the blockchain network, in exchange for “rewards” it provides customers after taking commissions for itself.
The lawsuit was filed one day after the SEC sued Binance, the world’s largest cryptocurrency exchange, accusing it of inflating trading volumes, mishandling customer funds and lying about its operations.
SEC Chair Gary Gensler has been trying to assert jurisdiction over the crypto industry, which he has said undermined investor trust in the U.S. capital markets.
In a separate 177-page filing denying the SEC’s substantive claims, Coinbase said it “welcomes regulation,” but that the regulator was arbitrarily and without Congress’ permission trying to fill the “regulatory gap” over crypto assets.
“Agency enforcement authority is important but not boundless,” it said. “The SEC’s action here is beyond those bounds and unlawful.”
Shares of Coinbase’s parent Coinbase Global rose $1.58, or 2.2%, to $72.33 in afternoon trading on the Nasdaq.
The case is SEC v Coinbase Inc et al, U.S. District Court, Southern District of New York, No. 23-04738.
Reporting by Jonathan Stempel in New York; Editing by Richard Chang
Our Standards: The Thomson Reuters Trust Principles.
Bitcoin has notched its highest-ever weekly close as crypto market momentum continues and the cryptocurrency is again nearing its all-time high.
Bitcoin (BTC) has closed at a weekly gain for the past six weeks in a row, and its most recent close at midnight UTC on May 18 was its highest weekly close ever at just below $106,500, according to TradingView.
Its last highest weekly close was in December when it reached $104,400. It later went on to reach an all-time high of $109,358 on Jan. 20, according to TradingView.
Bitcoin is now less than 3% away from its peak price and has gained 2% over the past 24 hours to trade around $104,730 at the time of writing.
Bitcoin also posted its highest-ever close in a 24-hour period on May 18. However, this is not the largest daily gain Bitcoin has made.
“Bitcoin just had its highest daily candle close… ever,” investor Scott Melker posted to X on May 19.
With a daily close above $105,000, “Bitcoin will develop a brand new higher high,” said analyst Rekt Capital.
Bitcoin’s weekly gains over the past six weeks are mirroring its gains in November when it added $30,000 in three of its largest weekly candles ever.
It has added around $12,000 so far in May, climbing from $94,000 to over $106,000 before it pulled back to around $105,400.
Related: BTC price to $116K next? Bitcoin trader sees ‘early week’ all-time high
Additionally, Arete Capital partner “McKenna” said the Coinbase premium had returned, which measures US sentiment by comparing the difference between Coinbase’s BTC/USD pair and Binance’s BTC/USDT equivalent.
The “strength of this bid on a Sunday night feels strange,” they said, adding its “possible someone knows some important news dropping next week.”
Bitcoin’s CAGR cools down
On May 18, analyst Willy Woo dived into Bitcoin’s compound annual growth rate (CAGR), noting that it was trending downward as the network continues to store more capital.
“BTC is now traded as the newest macro asset in 150 years, it’ll continue to absorb capital until it reaches its equilibrium,” he said.
Woo compared it to long-term monetary expansion of 5% and GDP growth of 3%, estimating that Bitcoin’s annual growth rate will be around 8% in around 15 to 20 years when it has settled.
“Until then, enjoy the ride because almost no publicly investable product can match BTC performance long term, even as BTC’s CAGR continues to erode.”
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New regulations threaten the security of the personal data of cryptocurrency users and may expose them to “physical danger,” the platform at the center of last week’s Paris kidnapping attempt has claimed.
“A ticking time bomb,” said Alexandre Stachtchenko, director of strategy at French platform Paymium, referring to the way information must now be collected during cryptocurrency transfers under EU rules.
He did not directly link this to a kidnapping attempt on Tuesday which, according to a police source, targeted the daughter and grandson of Paymium’s chief executive.
“If there is a leak of one of these databases from which I can find out who has money and where they live, then the next day it is on the dark web, and the day after there is someone outside your home,” Stachtchenko said. Data theft is commonplace. On Thursday, the leading cryptocurrency exchange in the United States, Coinbase, said criminals had bribed and duped their way into stealing digital assets from its users, then tried to blackmail the exchange to keep the crime quiet.
Instead of paying up, Coinbase informed US regulators about the theft and made plans to spend between $180 million and $400 million to reimburse victims and handle the situation.
Following the kidnapping attempt, Paymium issued a statement urging authorities to immediately reinforce the protection of companies within the sector, after other similar incidents this year.
Founded in 2011 and presenting itself as a European pioneer of bitcoin trading, Paymium also cited “the highly dangerous aspects of certain financial regulations, either recently adopted or in the making.”
It added, “With the unprecedented organization of massive and sometimes disproportionate collection of personal data, public authorities contribute to putting the physical safety of millions of cryptocurrency holders in France, and more widely in Europe, at risk.” In its sights are rules which came into force at the end of 2024 and which extended the Travel Rule in place for traditional finance transfers to include crypto assets.
The rules now require platforms to gather details about the beneficiary and, in return, transmit certain information about the customer to the receiving institution, including their name and postal address.
Also to be disclosed is the “address” of a customer’s cryptocurrency wallet, which shows details of their account and transactions, said Stachtchenko.
Such sensitive data is sometimes exchanged and stored insecurely by certain players.
Regulatory changes to tighten the rules on the crypto sector aim to “prevent the financial system from being used for corruption, money laundering, drug trafficking” among other criminal activities, said Sarah Compani, a lawyer specializing in digital assets.
Data collection is carried out by parties including banks, insurance companies and crypto-service providers, which are “supervised” and subject to heavy “security obligations, particularly IT and cybersecurity,” said William O’Rorke, a lawyer at cryptocurrency firm ORWL.
In 2027, European anti-money laundering regulations will restrict the use of wallets and cryptocurrencies that allow the holders to remain anonymous.
It follows a French law adopted last month to fight narcotrafficking, which targets anonymization devices such as the cryptocurrency “mixers” used to render funds untraceable.
There are many “legitimate interests” in having such tools however, said cybersecurity expert Renaud Lifchitz. He noted that they are sometimes used by journalists, or by activists opposed to an authoritarian regime which controls the traditional banking system.
The debate is more “political” than “security-related,” argued O’Rorke.
The recent kidnappings and attempted kidnappings can be explained above all by a “somewhat nouveau riche” and “ill-prepared” cryptocurrency sector, he said.
Since 2014, software developer Jameson Lopp has recorded 219 physical attacks targeting cryptocurrency users.
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Cryptoeconomy enabler Coinbase Global (COIN) rallied 16% over the past five days to celebrate its public listing on the S&P 500 index, scheduled for next week.
Coinbase’s addition to the S&P 500 marks a historic milestone as the first cryptocurrency exchange included in the index, symbolizing a step toward mainstream acceptance of crypto. This move is expected to boost institutional interest and attract new capital, especially through passive funds that must buy S&P 500 components, effectively making Coinbase and, by extension, Bitcoin (BTC), a “must-own” investment.
However, while rosy developments are nice to see for existing shareholders, I remain neutral on the stock due to risks like potential overvaluation, declining earnings, revenue concentration, and increasing competition.
Bernstein analyst Gautam Chhugani, who holds a Buy rating on Coinbase, estimates that its inclusion in the S&P 500 could attract approximately $16 billion in passive and active fund inflows, potentially boosting the stock further. However, with Coinbase’s market capitalization already having surged by $10 billion, much of this anticipated inflow may be priced in. The focus now shifts to the company’s underlying fundamentals.
Coinbase earns revenue through transactions, subscriptions, and services, mostly coming from transaction fees such as spreads and retail trading fees. In its Q1 2025 earnings report published earlier this month, Coinbase saw a 10% decline in trading volume, leading to total revenue of $2 billion—a 10% drop quarter-over-quarter—and transaction revenue falling 19% quarter-over-quarter to $1.3 billion. The company attributed this decline to crypto market volatility and ongoing uncertainty. Ultimately, much of Coinbase’s performance remains closely linked to the health and activity of the cryptocurrency market.
Widespread adoption of cryptocurrency will inevitably require government involvement. Crypto enthusiasts hoped President Donald Trump, a vocal supporter of cryptocurrencies, would help legitimize the space. However, meaningful legislation has yet to materialize, and Trump’s so-called “Strategic Bitcoin Reserve,” which doesn’t involve actual cryptocurrency purchases, fell short of expectations.
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