While experts consider the Binance case more severe, the lawsuits pose a significant threat to the way both exchanges conduct their businesses in the United States.
Binance registered in the Cayman Islands without an official headquarters, could potentially scale back its US operations.
Such a retreat for Coinbase would not work. The crypto company generated $687 million in revenue out of a total of $773 million from the US during Q1 2023.
The majority of Coinbase’s revenue and customer base resides in the United States, making it subject to the SEC’s jurisdiction.
The outcome of these lawsuits could potentially have existential implications for Coinbase.
Market Response
The lawsuits have already had an impact on Binance, with customers withdrawing nearly $1 billion within 24 hours of the SEC’s filing. Additionally, Ethereum outflows from Binance have reached $780 million since the lawsuit, according to blockchain analytics firm Nansen.
Coinbase CEO Brian Armstrong expressed his commitment to fighting the suit and seeking clarity on crypto regulations. However, sources suggest that Coinbase will face an arduous battle against allegations that its entire US operation is illegal.
