| The crypto world was riveted last week by news of the US Commodity Futures Trading Commission's hard-hitting lawsuit against industry leader Binance — and rightly so. But a case filed by the Securities and Exchange Commission just a few days later against a much smaller player whose name also starts with a "B" could also have big ramifications for the digital-asset space.
The SEC's complaint against this other "B" — Beaxy.com — flew somewhat under the radar. But it was the first time the agency sued a crypto platform for simultaneously operating an unregistered exchange, brokerage and clearing business – a problem that SEC Chair Gary Gensler has repeatedly said is rampant in the sector and poses a conflict of interest. Here's why it matters: The action is another building block that may help the agency build a case against bigger fish such as Coinbase Global Inc., the largest US crypto exchange, which also performs a range of business functions. The firm said it was recently notified of the SEC's intent to sue the platform over various issues, including certain token listings and its staking program. (Staking enables users to earn rewards on their crypto holdings by allowing them to be used to validate transactions.) The SEC, which hasn't confirmed the existence of the so-called Wells notice or plans to bring an enforcement action against Coinbase, declined to comment. Crypto advocates and critics alike took to Twitter after the Beaxy case dropped to note the significance of the case as a potential precursor to larger enforcement actions. Alex Grieve, a lobbyist at Tiger Hill Partners who represents several crypto companies including Coinbase, said it looked to him like the agency was trying to notch some precedent-setting wins before going toe-to-toe with the trading platform. This isn't the first time the SEC took action against a crypto exchange. Two years ago, the agency settled with Poloniex LLC, which it accused of violating its rules by allowing customers to buy and sell digital asset securities without properly registering. More recently, it brought an enforcement action against Kraken over its staking-as-a-service program. Both companies agreed to settlements without admitting or denying the SEC's allegations. These cases will likely lay the groundwork for future proceedings. But the Beaxy case — in alleging that the platform put investors at risk by blurring exchange, custody and clearing functions that should have been kept separate and registered as different businesses — signals a new avenue for enforcement. For its part, Coinbase executives, including Chief Executive Officer Brian Armstrong and Chief Legal Officer Paul Grewal, have stood behind the legality of the company's products and services, saying they're willing to fight the SEC in court if necessary. They've also claimed to have met with SEC staff dozens of times in attempts to register but that those conversations haven't been fruitful. As for whether the Beaxy case may inform any action against Coinbase, the company and the SEC declined to comment. But crypto watchers — and Coinbase shareholders — would do well to keep a close eye on the details of that complaint. | 
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