In what has already been a difficult year for cryptos, the Securities and Exchange Commission (SEC) in the US has sued Coinbase Inc, America’s largest crypto exchange by trading volume. The news has seen both Coinbase shares, and crypto values in general fall.

The SEC claims that Coinbase is operating illegally as an unregistered broker through several of its platforms, including Coinbase Prime, and Coinbase Wallet. SEC Chair Gary Gensler tweeted that “Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC.

This news came just a day after the SEC also sued Binance, the world’s largest exchange, and its co-founder Changpeng Zhao. Gensler once again tweeted that “Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.” Binance also faces a similar suit from the Commodity Futures Trading Commission.

060623 Bitcoin Chart

Crypto has suffered lots of price pressure this year, worsened by administrations pushing for higher regulation of the still relatively new asset class. The collapse of FTX late last year saw Bitcoin and other cryptos slump in price. After hitting an all-time high of $68,997.76, Bitcoin fell to less than a third of this value at the start of the year. Having staged a small recovery in recent months, Bitcoin still only managed to climb back to $30,000 in April.

With the SEC now taking on two of the biggest players in the market, cryptos have suffered another sell-off, with Bitcoin currently down more than 8.5% so far this week, and struggling to hold onto $25,000. The unregulated nature of cryptos has of course been one of the big attractors for many investors, but also makes it a target for new rules to be introduced in the future, and leaves those investors unprotected if mismanagement of their funds takes place.

The outcome of any suits could be some way off, but for now cryptos are expected to remain volatile in the short-term as people sell-off assets that look like they could be at risk, and as with FTX, withdrawals can be quick and brutal for even the large exchanges if panic spreads.