Mizuho: SEC's complaint against Binance puts a third of Coinbase sales at risk By Investing.com

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Mizuho: SEC's complaint against Binance puts a third of Coinbase sales at risk

Published Jun 06, 2023 08:02AM ET

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Investing.com -- The U.S. Securities and Exchange Commission's complaint against the world's biggest cryptocurrency exchange Binance includes language that could place a third of rival Coinbase's (NASDAQ:COIN) sales at risk, analysts at Mizuho warned on Tuesday.

The SEC's filing against Binance alleges that the company "unlawfully engaged in unregistered offers and sales of crypto asset securities."

Analysts at Mizuho argued in a note to clients that the line suggests that the SEC views so-called Alt-Coins -- or alternatives to top cryptocurrency Bitcoin -- as, in effect, securities. This could mean that authorities will treat these coins in a manner more akin to stocks.

The Mizuho analysts noted that SEC Chair Gary Gensler has recently said that "everything other than Bitcoin" should be considered a security.

With this development in mind, the Mizuho analysts flagged that Alt-Coins may soon require registration with U.S. regulators, adding that "[t]he cumbersome process and risk of application denial for tokens may inhibit [Coinbase]’s ability to generate transaction revenue."

On Monday, the SEC brought forward thirteen civil charges against Binance, including claims that the company had diverted customer funds into a trading entity controlled by chief executive Changpeng Zhao. That trading firm had also engaged in manipulative tactics to inflate Binance's trading volumes, the SEC added.

The SEC complaint also said Binance had been running unregistered exchanges and had misrepresented its trading controls to authorities.

Binance has denied the allegations, saying that user assets on its U.S. platform have never been at risk. But it noted that it is complying with SEC investigators.

The value of Bitcoin hovered near a two-and-a-half-month low on Tuesday, while other coins like Cardano also dropped.

Meanwhile, shares in Coinbase edged slightly higher in premarket U.S. trading.

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Mizuho: SEC's complaint against Binance puts a third of Coinbase sales at risk

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