SEC sues Binance & Coinbase 😱, what should you do?
key events you need to know, in a couple of mins.
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This week, the US Securities & Exchange Commission (SEC) has filed 13 charges against Binance and sued Coinbase. 😨
Here’s everything you need to know, and what you can do next if you’re on these exchanges.
What happened?
It looks like after clearing (most of) the mess from the banking crisis, the SEC finally has time on its hands to deal with crypto.
On 5th and 6th June, the SEC filed charges against Binance and Coinbase respectively.
It alleges that Binance hasn’t been honest about Binance.US being a separate platform for US investors, and had failed to restrict US investors from accessing Binance.com.
Binance has responded:
While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. We intend to defend our platform vigorously.
Since the charges, BNB coin is down 7.2%
On the very next day, the SEC sued Coinbase for operating as an unregistered exchange as well as for offering the sales of securities in connection with its staking-as-a-service program.
🤔Is crypto a form of “securities”?
Coinbase maintains that they "do not list securities or offer products to our customers that are securities". And they have been trying to work with the SEC for clear definitions of securities, while removing crypto that were previously deemed as “securities” by the SEC.
But, the SEC says Coinbase “has made available for trading crypto assets that are being offered and sold as investment contracts, and thus as securities.”
So while we keep an eye out as these legal tussles unfold, COIN is down 9% since:
🔮What's next for Binance & Coinbase?
Binance and Coinbase are among the biggest centralized crypto exchanges, it's no wonder the SEC will target them in its bid to start regulating the crypto space.
Both entities will be defending their cases against the SEC.
It will take up time and drain some resources.
Hopefully, at the end of it, we’ll get clearer regulatory guidelines for the crypto industry in the US.
⛈️Will Binance & Coinbase survive?
That's the million dollar question.
🔎 Nansen shared the latest withdrawal volumes on Binance and Coinbase:
Since the news of SEC’s suing,
💸Binance experienced a $1.43B negative netflow
💸Coinbase had experienced a $1.2B negative netflow
This isn’t the first rodeo for both exchanges, they would likely survive. But would not be unscathed.
The outcome (and if dirt gets uncovered 🤞) will likely leave an impact on the entire crypto industry too.
What should you do now? 🎯
1) If you have assets on Binance or Coinbase, withdraw
Holding your crypto assets on centralized exchanges is not the best solution, especially if you plan to hold them for the long run. Get a hardware wallet and guard your keys fiercely.
Read this to learn how to keep your coins secured.
2) If you own $COIN or BNB…
If your positions are up and you have not taken profit, consider selling some to get your capital back.
If you remain bullish on Coinbase or Binance, keep the rest. These would be ‘pure profits’, so you probably won’t have much trouble sleeping at night.
If you are not confident of Coinbase’s or Binance’s future, close your positions. Take a loss now, instead of having to live through the rollercoaster ride that we might have to sit through in the coming months (or years).
If you decide to hold, make sure you follow the events as the unfold!
3) Don’t Speculate ❌
No one knows where this legal tussle will go. If you don’t know what’s happening, don’t speculate in $COIN or BNB.
This article is not financial advice.
4) Only invest if you have a clear strategy in mind
I asked our friend, Aik Keong at CryptoKnight Academy for his advice to those who are thinking of investing in BNB now. He shared:
Crypto investing is a marathon with some parts of sprinting.
If you are holding BNB, you might want to consider selling some and take back your capital if the price falls further. There will always be another price of entry later on down the road. Your main objective should be to reduce your risk so that you can make it to the finishing line.
If you are looking to pick up BNB on the cheap, you should be prepared with a clear entry and exit, that's your "sprint" in this marathon. Have a clear strategy and don't let your emotions take over, which commonly happens to investors. Don't chase after the price, let the price come to you and execute the orders according to your strategy.
Aik Keong, CryptoKnight Academy