Binance vs SEC Lawsuit: Berenberg’s Insight On What it Could Mean For Coinbase!

Key Points:

• Binance’s lawsuit by the SEC may predict legal action against Coinbase.
• Binance may have violated securities law by offering unregistered securities to the public through their token and staking service.
• 37% of Coinbase’s net revenue would be at risk if the SEC targets their token trading and staking operations.

US Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, alleging that the exchange offered unregistered securities to the general public in the form of their BNB token and Binance-linked BUSD stablecoin.

Additionally, the SEC claimed that Binance’s staking service violated securities law. Berenberg analyst Mark Palmer has commented on the situation, stating that the lawsuit against Binance could potentially be a warning for rival crypto exchange, Coinbase.

Palmer noted that several details of the lawsuit against Binance echo those that the SEC previously filed against crypto exchanges Bittrex and Kraken. He believes that these cases in aggregate could represent a preview of the action that is likely to be filed against Coinbase in the future.

Coinbase itself received a warning from the SEC in March that it may soon face enforcement action tied to its listing of potential unregistered securities. Palmer estimates that at least 37% of Coinbase’s net revenue would be at risk if the SEC were to target the company’s crypto token trading and staking operations.

This SEC action has led to large declines across the board for crypto markets on Monday, including a 9.1% drop in Coinbase’s share price, which closed the session at $58.71. Currently, Coinbase has 11 buy ratings, 7 holds, and 6 sell ratings, according to FactSet data.

Palmer continued with a hold rating and $55 price target on the stock, and suggested that investors should be focusing on whether Coinbase would have the ability to successfully pivot its business model and geographic focus if it were forced to curtail or cease a large portion of its business activities in the U.S. as a result of an SEC enforcement action.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Annie

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