Tuesday, June 6th, 2023

We’re empty of major economic prints today, and Q1 earnings season is almost completely wrapped up. Thus, it’s a matter of extremely bad timing for the crypto community that the Securities & Exchange Commission (SEC) has chosen now to come down hard on what it sees as deceitful practices of crypto majors Binance and Coinbase (COIN Quick QuoteCOIN - Free Report) . Over the past 24 hours or so, both companies have been served with lawsuits regarding their practices.

Coinbase is down -22% in today’s pre-market following the SEC’s filing against the publicly-traded crypto platform in New York Federal Court for “unregistered broker and clearing agency,” among other things. This follows yesterday afternoon’s headline where the SEC sued Binance, in what SEC Chair Gary Gensler this morning referred to as engaging in an “extensive web of deception.”

Coinbase is now trading around $46 per share. Going back to all-time highs set on the Nasdaq back in November of 2021, the company closed at nearly $343 per share. The first slide off this peak was in the December ’21 sell-off in equities markets overall, and the second was back when the Nasdaq in particular hit the skids (relative to the blue-chip Dow) in April of 2022. Shares had been maintaining value at or above $50 per share since then, but that appears to be changing.

Serious questions revolving around the crypto market have been with us since the fall of crypto exchange fund FTX, and the subsequent arrest of its founder Sam Bankman-Fried a month later. That scandal emerged when Binance made a move to acquire FTX, and when actuarial peculiarities emerged, the deal — and FTX itself — began to unravel. It would appear the SEC had kept its eye on Binance since that incident, which brings us to present-day. More news will undoubtedly follow.

Pre-market futures are stepping carefully this morning, down again after a flat day overall Monday, which followed the strongest trading day in months, at least for the Dow index. Likely the next major market catalyst will happen a week from tomorrow, when the Fed decides on interest rate levels. A majority of analysts expect the Fed to pause rate hikes at their current 5.25-5.50% range. If anything changes (meaning another 25 bps hike; there is 0% chance of a rate cut next week), we may see market activity far more noteworthy than where we stand this morning.

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