The U.S. federal government reached a $4.3 billion settlement with Binance on Tuesday. In light of this, Coinbase is now looking to regain its status as crypto’s leading exchange.
The U.S.-based exchange’s shares have seen an increase of approximately 18% in the past week, rising from about $100 to around $118 as of Monday morning. Brian Armstrong, CEO of Coinbase, said in an interview with CNBC in London, “We’ve had a moment recently, with the enforcement action against Binance, that’s allowing us to turn the page on that and hopefully close that chapter of crypto’s history.”
Armstrong emphasized that “Building a company offshore, skirting regulation, it’s just not going to work.”
His comments and Coinbase’s upswing in stock price coincide with the enforcement action against Binance. CEO Changpeng “CZ” Zhao was required to step down and plead guilty to U.S. federal charges. This has opened up an opportunity for Armstrong’s firm to gain market share.
Founded in 2012, Coinbase has positioned itself as the “good guy” of crypto, engaging with U.S. regulators and refraining from listing volatile cryptocurrencies that are considered unregistered securities by regulators like the Securities and Exchange Commission.
In 2017, Zhao, who previously worked as a programmer for the Tokyo stock exchange and Bloomberg Trading, launched Binance and quickly eroded Coinbase’s market dominance following the fall of Mt. Gox, the former go-to exchange for trading Bitcoin.
Binance, with an undisclosed headquarters and a willingness to skirt regulatory restrictions according to U.S. authorities, swiftly became a crypto titan that dominated both the simple purchase and sale of cryptocurrencies as well as the market for more complex financial instruments built on top of crypto prices.
After initially being the leading exchange, Coinbase found itself caught off guard and subsequently implemented new policies to expedite the vetting process for listing new cryptocurrencies, including Dogecoin.
In 2023, repeated regulatory action in the U.S. and abroad weakened Binance. The Commodity Futures Trading Commission sued Binance in March and the SEC followed suit in June. As a result, Zhao’s exchange has seen its market share decline.
Coinbase itself faces legal issues. In June, one day after suing Zhao and Binance, the SEC filed a lawsuit against Armstrong’s exchange, which is ongoing.
Armstrong expressed confidence in their case against the SEC and stated, “Regardless of the outcome, it’s going to help us with our goal of getting regulatory clarity.”
