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abnormal first-significant-digit distributions, size rounding, and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely driven by strategy or exchange heterogeneity. We quantify the wash trading on each unregulated exchange, which averaged over 70% of the reported volume.Unfortunately, despite knowing about the manipulation, the CFTC approved Bitcoin futures ETFs. Among the requests that the SEC refused was one from Grayscale Bitcoin Trust. Grayscale sued the SEC and, back in August, the panel of judges ruled in their favor:
The court's panel of judges said Grayscale showed that its proposed bitcoin ETF is "materially similar" to the approved bitcoin futures ETFs. That's because the underlying assets— bitcoin and bitcoin futures - are "closely correlated," and because the surveillance sharing agreements with the CME are "identical and should have the same likelihood of detecting fraudulent or manipulative conduct in the market for bitcoin."The prospect of the SEC approving this ETF and others from, for example, BlackRock and Fidelity led to something of a buying frenzy in Bitcoin as shown in the "price" chart, and in headlines such as Bitcoin ETF Exuberance Drives Four-Week ‘Nothing for Sale’ Rally:
With that in mind, the court ruled that the SEC was "arbitrary and capricious" to reject the filing because it "never explained why Grayscale owning bitcoins rather than bitcoin futures affects the CME’s ability to detect fraud."
Bitcoin is climbing for a fourth consecutive week, with the digital token’s price lingering just below an 18-month high of $38,000, as more investors bet that US exchange-traded funds that hold the largest cryptocurrency are on the verge of winning regulatory approval.Below the fold I look into where this euphoria came from, and why it might be misplaced
There already are spot Bitcoin ETFs, just not in the USA. I believe the first launched in:
February 2021, when the Purpose bitcoin ETF launched in Canada. Unlike GBTC, which trades over-the-counter, Purpose trades on the Toronto Stock Exchange, close to NAV. At 1%, its management fees are half that of GBTC. Within a month of trading, Purpose quickly absorbed more than $1 billion worth of assets.So why would a US-based Bitcoin ETF be a big deal? The thesis is that by making it easier for US
The number of over-the-counter desks has declined, with mainly the more conservative ones remaining, according to Tegan Kline, co-founder of Edge & Node, which developed a crypto project called The Graph. That, combined with the erosion of leverage, has sapped liquidity.
“Leverage is gone,” Kline said. “A lot of people have pulled money out of the system or they have money stuck at FTX.”
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| Quarter | Retail $M | Institutions $M | Institutions % |
|---|---|---|---|
| Q4 2021 | 2,185.8 | 90.8 | 4.2 |
| Q1 2022 | 965.8 | 47.2 | 4.9 |
| Q2 2022 | 616.2 | 39.0 | 6.3 |
| Q3 2022 | 346.1 | 19.8 | 5.7 |
| Q4 2022 | 308.8 | 13.4 | 4.3 |
| Q1 2023 | 352.4 | 22.3 | 6.3 |
| Q2 2023 | 310.0 | 17.1 | 5.5 |
| Q3 2023 | 274.5 | 14.1 | 5.1 |
- Retail trading fee income has collapsed, down 87% from its peak.
- Institutional trading fee income has collapsed 84% from its peak.
- Coinbase is wholly dependent upon retail traders, who account for around 95% of its fee income.
Trading volume is the lifeblood of a crypto exchange — and Coinbase’s is through the floor. The exchange saw $76 billion in total trading volume in Q3, down from $92 billion in Q2. (They did $547 billion in trading volume in Q4 2021, their last profitable quarter.)So volume is down 84% from its peak. No wonder Coinbase laid off staff in June 2022 and January 2023. And why Blockchain.com just raised money at less than half its valuation in 2022.
The problems are exacerbated by the fact that last June the SEC sued Coinbase for:
selling unregistered securities and running an exchange, a broker-dealer, and a clearinghouse as part of the same operation — and without registering any of these.Castor and Gerard point out that:
If the SEC wins, Coinbase may have to stop trading in any cryptos other than CFTC-regulated commodity coins such as bitcoin. There isn’t enough volume in those for Coinbase to live on.Lynn Parramore transcribes an interview with Jim Chanos in Jim Chanos: “The Crypto Ecosystem Is Well-Suited for the Dark Side of Finance.” that expresses the famed short-seller's skepticism:
This is why Coinbase is so insistent on trading blatant unregistered securities — it’s all they have left for a business model.
JC: ... The last iteration that you just touched upon is the hope by aspects of Wall Street that crypto gets institutionalized because the one thing that Bitcoin really has — and we’ve pointed this out to our clients — is ridiculous levels of transaction fees associated with it. So Coinbase, for example, which is one of our shorts, charges customers over 4% per round trip trade to transact in a so-called currency.So, even if there is a flood of retail money into Bitcoin ETFs, the exchanges' fee income isn't going to recover. Chanos' students share his skepticism about the industry:
LP: Why would people be willing to pay that?
JC: Well, exactly. They think the asset price is going to go up. It’s like a Nasdaq stock, not a currency. So they’ll pay, and Wall Street wants the fees. The cost structure in crypto is quite high and so the fees are really high. You need retail investors because institutions aren’t going to be paying 4% per round trip to buy and sell Bitcoin. Mom and Pop are, so Wall Street needs to keep the public interested in the crypto space. The paradox, of course, is that if BlackRock and Vanguard and whoever do get ETFs, it’s actually going to force fees down, not up, because ETF fees will be a fraction of the cost of what Coinbase or Binance charge. It’s like mutual fund fees and stock trading fees: they’ve all converged to zero.
LP: Are your Wisconsin students still excited about crypto?Will the flood happen? Teresa Xie's Former Crypto Day Traders Say No Thanks Even as Bitcoin Roars Back presents some negative evidence:
JC: They were much more enthusiastic in 2021, 2020, 2019. There’s a lot less enthusiasm now in terms of students going to work for a crypto startup or whatever. I had a number of them in 2020 and 2021 who said they were going to work in the digital currency or blockchain space. I don’t hear that as much anymore.
LP: How about your Yale students?
JC: The last two springs, they’ve been skeptical. During the spring semester of 2022, Bankman-Fried’s now-infamous interview with Bloomberg dropped about an hour before my class started. I ran to the audiovisual department to see if I could get the interview up on our screen because to me it was such a bombshell. This was where Bankman-Fried basically called the crypto ecosystem a giant Ponzi scheme. I told the class it was very rare to get an industry leader telling you that his industry is a Ponzi scheme. That was seven months before the collapse.
Craig Murray, who estimates he made almost $200,000 in the market, says he escaped losing everything to FTX by a hair after friends in the industry heard whispers about its imminent collapse. By that point, the 23-year-old — who lives in New York and recently dropped out of Vanderbilt University — had made up his mind.So it seems unlikely that there will be a huge flood of retail dollars into the market. Even if there were, they would go into Bitcoin ETFs, which would present the exchanges with two big problems:
“That kind of put me over the edge,” Murray said. “I just decided it wasn’t worth it. Why would I have my money in this space when there’s a chance that one day it could just all go away?”
Another sign that retail investing in crypto isn’t returning to previous levels can be seen in weekday versus weekend volumes, with the presumption that the typical person trading on a weekend is a day trader.
“It’s not unusual nowadays to see weekday trading volume average 50% higher values than weekend trading volume, whereas in the past this ratio was almost 1:1,” said Fredrick Collins, chief executive and founder of crypto data platform Velo Data.
- much less retail trading, because it would migrate to ETFs for low fees and the security of dealing with institutions like BlackRock,
- and a much higher proportion of very low fee institutional trading.
22 comments:
My take on the Binance settlement, which at $4.3B sounds large but in context is just the cost-of-doing-business, is that DoJ didn't want to and didn't need to take the heat for shutting Binance down.
I agree with David Gerard and Amy Castor when they argue that compliance will severely hamper the future Binance, both because it will shed the most profitable customers who are "here for the crime", and because of the large extra costs of compliance. But I also think that DoJ figured out that, as this post argues, the future for regulated exchanges is grim. The DoJ knows the SEC is going to let BlackRock and Fidelity stomp all over Binance's fee income, and that of the other regulated exchanges. So there was no reason to draw flak by explicitly shutting Binance down; compliance and ETFs will do the trick for them without leaving DoJ's fingerprints on the corpse.
Patrick McKenzie's take on Binance in The Bond villain compliance strategy is well worth reading:
"Binance will suffer a wave of tag-along enforcement actions, in the U.S. and globally. Partly this will be for face saving; global peers of the U.S., which Binance has transacted billions of dollars in, will largely not want to signal “Oh we’re totes OK with money laundering for terrorists and child pornographers”, and so they’re going to essentially copy/paste the U.S. enforcement actions. They will then play pick-a-number with Binance’s new management team, who will immediately cave.
...
Many crypto advocates believe the U.S. institutionally wants to see Binance reform into a compliant financial institution. They are delusional. The U.S. is already practicing their lines for the next press conference. This course of action allows them to deflate Binance gradually while minimizing collateral damage, which responsible regulators and law enforcement officials actually do care quite a bit about."
David Pan reports that there are some places the hype may be working in Bitcoin ETF Optimism Spurs Largest Asset Inflows Since Late 2021:
"Anticipation of an eventual US spot Bitcoin exchange-traded fund has helped to spur inflows into digital-asset investment products for a ninth consecutive week, the largest run since the crypto bull market in late 2021.
Those products, such as trusts and exchange-traded products, saw inflows of $346 million last week, with Canada and Germany contributing to 87% of the total, according to CoinShares. Only $30 million came from the US, a sign of continued low participation from the country, the asset-management firm said in a report on Monday.
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Bitcoin products raked in $312 million last week, pushing inflows to over $1.5 billion since the start of the year. Ether products saw $34 million in inflows last week, almost negating outflows all of 2023."
$1.5B is 9% of daily BTC volume, or 0.2% of "market cap", so don't get carried away.
Henry Farrell's How the Feds bounced Binance is well worth reading. Farrell focuses on how cryptocurrencies' use of "incentive compatibility" is fine in theory but not in practice:
"It is how the Binance outcome - or something like it - was plausibly written into the contradictions of the cryptocurrency economy from the beginning; in particular, the contradictions between the theoretical mechanisms that it relies on, and the practical ways in which the economy operates.
To expand that out a bit: the key theoretical grounding of crypto can be found in applied economic theory - specifically, the kinds of ideas about ‘incentive compatible mechanisms’ that were super popular among micro-economists in the 1980s. But a lot of the practice of crypto is anything but incentive compatible. If you, as a crypto entrepreneur, want to maximize profits, you’re going to behave in ways that make the incentives break down."
This is a re-casting of the problem I wrote about in Economies Of Scale In Peer-to-Peer Systems. I first wrote about incentive compatibility in this context in 2013's The Bitcoin vulnerability.
In the decade since I haven't seen anyone propose a viable technology that would push back against these economic forces, and we keep seeing their effects in practice.
The End of Crypto’s Dream to Escape From Government by Henry Farrell and Abraham Newman is also worth reading. They conclude:
"Binance’s acquiescence to Uncle Sam is indeed a watershed moment for crypto. The company had little choice and would likely have suffered a far worse fate if it had not passed under the yoke. But the remaining true believers have a point too. What does crypto have to offer—beyond clunky, wasteful and overly complicated technical systems—if it abandons its aspirations to operate independent of government oversight? The probable answer is: not much. But when the choice is money or ideals, money usually wins, and the government knows it."
The Bitcoin bubble has been blown from about $17K to about $43K in the last year on the prospect of a flood of retail money into Bitcoin ETFs, which the SEC is expected to approve on Jan 10. In Bitcoin ETFs — coming soon! But in cash only Amy Castor and David Gerard point out that the kind of ETF the SEC is expected to approve may not be the pot of gold at the end of the rainbow:
"About a dozen companies have recently submitted filings for a bitcoin ETF. In addition to Ark 21Shares, there’s Grayscale, BlackRock, Bitwise, VanEck, Wisdomtree, Invesco and Galaxy, Fidelity, Valkyrie, Global X, Hashdex, and Franklin.
But here’s the catch: if the SEC is forced to approve a spot bitcoin ETF, it wants it to use in-cash creation. When new ETF shares are created or redeemed, that process would take place only in cash — and not in bitcoins. Only the company issuing the shares could touch a bitcoin.
Most ETFs of stocks allow in-kind redemption, where you put in or take out whatever asset the ETF is tracking directly. But the SEC doesn’t want broker-dealers to handle cryptos directly. So bitcoin ETFs will not allow in-kind creation or redemption — only cash will go in or out, and absolutely not actual bitcoins.
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When ETF shares are created or redeemed, the AP is the only one who can create and redeem shares directly with the issuer. APs make their money selling to retail investors — who buy through their brokerage on the secondary market.
In-kind ETFs are known for their tax efficiency for the APs. When an AP redeems shares, the ETF issuer simply pays the AP in assets from the underlying holdings of the ETF itself. Since the AP isn’t selling the underlying assets, there are no capital gains. They don’t have to worry about gains until they sell their actual shares.
A cash-create ETF erases most of that tax advantage. Creation or redemption in kind doesn’t create a taxable event, but doing it via cash does. So cash-based ETFs are less efficient for the APs. The ETF is also more complicated for the issuer to manage."
As I predicted, spot Bitcoin ETFs will collapse exchange fee income. Katie Greifeld reports that Grayscale’s 1.5% Fee Is Higher Than Spot Bitcoin ETF Competitors Like Fidelity, Invesco:
"BlackRock intends to charge 0.2% for the first year or until it reaches $5 billion in assets, with 0.3% as its eventual fee."
As usual, Matt Levine has fun with this:
"One claim that you sometimes hear about crypto is that it gets rid of middlemen: Instead of relying on a bank to hold your money for you, you can hold it directly on the blockchain. But one reason that crypto is actually popular — a reason that it has gotten a lot of attention, and that a lot of people from the financial and tech industries have gotten into crypto — is that it is insanely lucrative for middlemen. A lot (not all) of the basic products of traditional finance are old and well understood and heavily regulated and fiercely competitive; margins are low and bid/ask spreads are slim. Whereas crypto is relatively new and poorly understood and complicated and illiquid and you can charge 2% on every trade. Sam Bankman-Fried did not briefly become the world’s richest young person because crypto got rid of middlemen. Quite the opposite."
Emily Nicolle reports that BlackRock, Ark Slash Bitcoin ETF Fees Again Ahead of SEC Deadline:
"Competition among prospective Bitcoin exchange-traded fund issuers intensified, as companies further slashed fees in a bid to make products more attractive to investors ahead of a regulator’s decision on their future.
BlackRock Inc. lowered the fee on its proposed iShares ETF by five basis points to 0.25%, according to an updated filing with the US Securities and Exchange Commission on Wednesday. It also lowered its introductory offer on the fund, so that investors will pay a 0.12% fee in the first 12 months or for the first $5 billion in assets, rather than 0.20%."
BTC spot ETFs were approved, so after the pump came the dump, as Davod Pan reports in Bitcoin Extends Decline With ETF Exuberance Beginning to Fade:
"Bitcoin continued to pull back from a two-year high as traders parsed results from the much ballyhooed first day of trading of exchange-traded funds holding the cryptocurrency.
“With the first day of ETF trading behind us, it already feels like the crypto markets have moved on to looking toward the next narrative,” said Chris Newhouse, DeFi analyst at Cumberland Labs.
The original cryptocurrency fell as much as 6.5% to $43,179. On Thursday, Bitcoin briefly topped $49,000 for the first time since December 2021 after the almost dozen ETFs began trading.
...
The share prices of the ETFs were all down more than the price of Bitcoin."
Be careful what you wish for. Note that the pump took $5B in fake dollars:
"Tether has printed five billion USDT stablecoins in the past month out of thin air as “loans” — backed in the Tether reserve only by the “loans” themselves."
Amy Castpr and David Gerard report on the dump after the ETF pump:
"The first big post-ETF price drop came on Friday, January 12. Bitcoin slipped from $46,000 to $43,500 in two hours — only one hour after the day’s printing of a billion tethers was released. A few hours after that, another dump took the price from $43,500 to $41,000.
The bitcoin market is fake and in tethers. The retail securities market is real and in actual dollars. You can’t pump bitcoin ETFs with tethers.
After years of being severely discounted from the price of the bitcoins in the fund, Grayscale GBTC finally reached net asset value. This turned out to be not so great — it looks like long-frustrated GBTC holders are finally dumping now that they can.
...
We do expect downward pressure on the bitcoin price to continue from the GBTC holders who can finally cash out near par.
Tether pumps only work if nobody tries to cash out into the pumped-up price. Unfortunately, that only works as long as nobody wants real dollars. It turns out they do."
Emily Graffeo reports that Traders Pull $579 Million Out of Grayscale Bitcoin ETF:
"The fund, which won US Securities and Exchange Commission approval to convert to an ETF from a trust last week, has seen outflows totaling about $579 million, according to data compiled by Bloomberg. It’s a stark difference from the other nine spot Bitcoin ETFs, which have pulled in a total of nearly $1.4 billion.
...
Other spot Bitcoin ETFs have all seen net inflows, with BlackRock’s IBIT pulling in nearly $500 million in its first two days of trading, and Fidelity’s FBTC getting roughly $421 million. The inflows suggest that even outside of potential seed funding from fund issuers, demand is strong for Bitcoin exposure in a physically backed ETF."
So there has been some net buying but BTC is down 4.8% over the last 7 days.
David Pan and Olga Kharif report on the continuing dump in Bitcoin Retreats to One-Month Low as ETF-Led Enthusiasm Wanes:
"Bitcoin slid to the lowest since mid-December as the speculative demand for the token sparked by hype about new exchange-traded funds dissipates, leaving the cryptocurrency in the red since the start of 2024.
The largest digital asset flirted with a drop below $40,000 before trading at $40,843 as of 11:40 a.m. Friday in Singapore, a decline of 4% in the past 24 hours. Smaller tokens like Ether, Solana and Polkadot also struggled.
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Grayscale’s Bitcoin fund, which was created in 2013, has seen about $1.6 billion in outflows since it started trading as an ETF.
The Grayscale fund traded at a discount to its underlying holdings last year when it was a closed-ended vehicle, spurring some to bet on the gap narrowing. Speculators may be exiting that trade now that the discount has all but gone.
“GBTC selling, that’s the story,” said crypto investor Meltem Demirors. Shares in the fund have also been “pledged as collateral or used to repay bad loans” as part of crypto sector insolvencies, she said."
The SEC only approved BTC ETFs on a cash basis - if money comes in the ETF has to buy BTC and if money goes out the ETF has to sell BTC. This in particular applies to the Grayscale investors who can now exit Hotel California. David Gerard and Amy Castor write:
"We know that investors are cashing out of Grayscale’s GBTC as fast as possible now that they can — with $2.2 billion flowing out since the closed-ended trust became a two-way ETF. Some of that money seems to be circling back into other bitcoin ETFs.
When the shares are cashed in, the bitcoins backing those shares have to be sold. Even if Grayscale sells its BTC over-the-counter (OTC) via Coinbase Custody, that’s still going to push the bitcoin price down."
Rotating from GBTC to a lower-fee ETF involves both a sale and a purchase of BTC, with associated transaction costs. Exiting is driving the "price" down, and rotation is driving volume up.
12 days ago at the peak of the ETF frenzy, BTC was about $48.6K. Right now BTC is about $38.6K, down ~20%. As Gerard and Castor point out:
"With ETFs, shorting bitcoin is now something you can do a bit more reliably — the WSJ notes that “speculators close out their bets and the price plummets.”"
Muyao Shen reports that ‘Alameda Gap’ Keeps Bitcoin Volatile Even as ETFs Boost Trading Volume:
"The ability to easily or quickly buy and sell the digital currency hasn’t improved since the 10 funds began trading Jan. 11, traders say. Liquidity is especially important in a relatively new market such as crypto, where a single large trade can have an outsized impact on an asset price, raising the risk of manipulation.
“The emergence of spot Bitcoin ETFs, while very positive for overall market sentiment, do not have any noticeable impact on overall market liquidity,” said Jordi Alexander, the Singapore-based founder of digital-asset trading firm Selini Capital."
Katie Greifeld's Fidelity and BlackRock Are Dominating the Bitcoin-ETF Flow Race rates a "Well, Duh!":
"BlackRock’s iShares Bitcoin Trust (ticker IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) are leading the field with about $1.9 billion and $1.6 billion of inflows, respectively, according the latest available data compiled by Bloomberg. That’s roughly a combined 70% of spot Bitcoin ETF inflows so far.
The early dominance speaks to the might of the two asset management giants’ marketing and distribution channels, which has likely helped to land the products in both institutional and retail portfolios. That bid has persisted even as Bitcoin plunged post-launch, dragging both IBIT and FBTC to double-digit losses. Their distribution muscle, combined with name recognition that smaller issuers might not enjoy, have given the pair a massive lead on the rest of the field."
Bitcoin Spot ETFs Are Starting to See Slowing Investor Interest by Elijah Nicholson-Messmer reports that:
"Interest in the much anticipated spot Bitcoin ETFs appears to be cooling, with Wednesday marking the group’s lowest single-day of investor gross inflows since trading began on Jan. 11.
The nine new funds received about $270 million in inflows yesterday, according to a report from JPMorgan Chase & Co. Once outflows from Grayscale Investment’s spot Bitcoin ETF are taken into account, overall net net outflows were about $153 million on Wednesday, It’s the third consecutive day of net outflows for the 10 funds. Outflows have come exclusively from GBTC, which converted from a trust following the US Securities and Exchange Commission’s approval of the investment vehicle."
How Do You Profit From Bitcoin ETFs? Investors Face Dilemma by Olga Kharif reports that "About 70% of Bitcoin supply hasn’t been touched in a year":
"buying and holding has major drawbacks: It hinders the development of the blockchain for use cases besides speculation. Ethereum is actually the most commercially used blockchain. And for investors, it becomes a bit of a game of chicken where those who hang on the longest are at risk of being left holding the bag for those who exit the often volatile market.
“There is a collective action problem here,” said Hilary Allen, a professor at American University’s Washington College of Law. “All holders will theoretically be better off if no one sells, but then no one can actually realize any profit on their investment.”
As Amy Castor and David Gerard write:
"Nobody cares about the blockchain
The point of cryptocurrency is to create financial instruments that are obscured from regulators. The crypto markets are happy to trade centrally controlled tokens like XRP or most defi tokens on this basis.
When the bitcoin blockchain lost a lot of hashpower in the Bitcoin Cash wars in late 2017, the time between blocks could be over an hour. The crypto world barely noticed — because all the action was market traders on the exchanges in a bubble."
Kharif also notes:
"The January approval of 10 US ETFs has resulted in net investor inflows of more than $5 billion"
$5B sounds like a lot but it is only as much as a typical Tether pump.
Katie Greifeld's Grayscale’s Bitcoin ETF Exodus Reaches $7.4 Billion in First 30 Trading Days reveals:
"The $24.2 billion Grayscale Bitcoin Trust (ticker GBTC) has seen $7.4 billion exit across 31 trading days as of Monday, Bloomberg data show. GBTC has yet to post a single inflow since it converted into an ETF in mid-January.
...
To be sure, outflows have slowed in recent days, with just $22 million leaving the fund on Monday versus as much as $640 million in January. But even still, GBTC’s $7.4 billion year-to-date outflow is the second largest among more than 3,400 US-listed ETFs."
US Spot-Bitcoin ETFs Post Largest Three-Day Outflow Since Launch by Sidhartha Shukla reports that:
"A net $742 million left the ETFs from Monday through Wednesday, reflecting outflows from the Grayscale Bitcoin Trust and a moderation in subscriptions for rival offerings from the likes of BlackRock Inc. and Fidelity Investments.
The funds have garnered net inflows of $11.4 billion to date, data compiled by Bloomberg show, still one of the most successful debuts for an ETF category. The Grayscale Bitcoin Trust, which was converted into an ETF, has seen $13.3 billion of outflows."
Emboldened Crypto Market Participants Shrug Off SEC’s Probe of Ethereum by Olga Kharif and Isabelle Lee reports that:
"The SEC is investigating Ethereum after its 2022 software upgrade drastically altered the way the network orders transactions. The upgrade, called the Merge, allowed people to stake their Ether to earn interest, and that raised fresh questions of whether it’s a security. There’s also the question of whether a small group of people has an outsized influence on Ethereum’s development and operations.
...
In its solicitations for public comments on the proposed spot Ether ETFs, the SEC asked, “Are there particular features related to ether and its ecosystem, including its proof of stake consensus mechanism and concentration of control or influence by a few individuals or entities, that raise unique concerns about ether’s susceptibility to fraud and manipulation?” Since the Merge, there have been worries of too few entities controlling some aspects of Ethereum’s operations."
Bob Van Voris reports on some regulatory clarity in SEC Suit Against Coinbase Can Go Forward, Judge Rules:
"The US Securities and Exchange Commission can proceed with its lawsuit against Coinbase Inc., the biggest US cryptocurrency-trading platform, claiming the company failed to register as a securities business, a federal judge in New York ruled.
The SEC adequately alleged that Coinbase engages in the “unregistered sale and offer of securities” and illegally operates as an exchange, a broker and a clearing agency under federal securities laws, US District Judge Katherine Polk Failla said in her opinion Wednesday."
Madlin Mekelburg reports that Coinbase Consumer Suit on Securities Claim Revived on Appeal:
"The 2nd US Circuit Court of Appeals said Friday the federal judge in New York who dismissed the suit last year shouldn’t have relied on a December 2021 user agreement because Coinbase had updated the language from earlier versions. The three-judge appeals panel sent the case back to the district court to determine which user agreement should be used in determining whether to dismiss the class-action suit."
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