Then came a $100-million settlement with Coinbase Global over weak internal controls, a lawsuit against the Winklevoss twins’ Gemini and broker Genesis for allegedly selling unregistered securities, and a $45 million settlement with lending platform Nexo (which has ceased US operations). Subpoenas are flying.
The wheels of justice turn slowly – the Gemini and Genesis complaint came too late for customers fighting to get back $900 million in trapped funds – but they’re accelerating now. Regulators like the SEC rightly feel vindicated by the past year’s events, which saw a widespread loss of faith in crypto fail to snowball into a wider economic crisis. The collapse of FTX demonstrated the industry’s failings but also the benefits of a tough regulatory line on exchanges, such as when the SEC intervened behind the scenes in 2021 to ward Coinbase off launching its own crypto-lending product.