Binance and Coinbase are both alleged to have violated the law by operating as securities exchanges without registering their businesses with the SEC. Binance faces additional charges, along with its CEO, of diverting customer funds to a separate business, among other accusations.
Most recently, the SEC asked a federal judge to freeze the assets of Binance's U.S. platform.
The lawsuits are the latest in an ongoing tussle between government officials who describe the crypto industry as the "Wild West, and creators of digital assets who seek to legitimize cryptocurrency as a currency of the future.
Industry leaders say that, with their latest actions, U.S. regulators are more clearly signaling that they seek to ensure cryptocurrency has no room in the traditional financial system.
And leading regulators are more open about their thoughts on the merits of cryptocurrency. SEC Chair Gary Gensler told Bloomberg: "We don't need more digital currency... we already have digital currency - it's called the U.S. dollar.
What results from the legal battle could greatly diminish the growth of the crypto industry or, alternatively, restrict the scope of the SEC's regulatory authority.
Federica Pantana, an attorney at Davidoff Hutcher & Citron in New York who handles SEC cases, has been watching the episode unfold and is now clear with her crypto clients in the interim: "With the SEC taking a strong enforcement agenda, there is no question that firms have to take the view that crypto assets are securities and platforms that exchange these assets have to accept that."
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