The moves likely represent an opening salvo of government action against cryptocurrencies with profound implications that I'll unpack in this article.

The complaint against Coinbase centered on it being an unregistered securities exchange, explicitly targeting its "crypto yield" offerings.

The charges against Binance relate to running an unregistered securities exchange, issuing their own unregistered security, mismanaging customer funds, and an assortment of serious market manipulation allegations.

Gary Gensler, the head of the SEC, described Binance's actions as similar to if the New York Stock Exchange was also operating as a hedge fund making markets.

Binance also raised money through an "initial coin offering" of their BNB token, which the SEC deemed an unregistered security.

The SEC determines if something is a security and subject to US laws through the Howey Test, which states something is a security if it includes an "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others."