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1 big thing: What Coinbase should fear

Data: FactSet; Chart: Axios Visuals

The 136-page complaint the SEC filed against crypto exchange Binance on Monday morning, alleging market manipulation, securities law violations, and fraud, can be taken as a template for any future complaint against Coinbase, Axios' Felix Salmon writes.

Why it matters: An SEC case against Coinbase has been expected at least since March when the exchange revealed it had received a "Wells notice" from the agency.

  • Neither Coinbase nor the SEC could be reached for comment.
  • The SEC has filed earlier complaints against foreign crypto companies for being unregulated securities exchanges, and against domestic companies for their staking products, where customers were encouraged to earn interest on their crypto.

The big picture: We now have chapter and verse on exactly how the SEC thinks crypto exchanges are operating illegally.

  • The Binance complaint includes 39 pages detailing how a series of coins, including Solana, Cardano, Polygon, Filecoin, and others, are in fact securities — which means they can be traded only on a registered securities exchange.
  • Binance isn't a registered securities exchange. Neither is Coinbase, which also lists all those coins and allows its customers to trade them.

What they're saying: Binance "unlawfully offered three essential securities market functions—exchange, broker-dealer, and clearing agency—on the Binance Platforms without registering with the SEC," says the complaint.

  • "Acutely aware that U.S. law requires registration for these functions, Defendants nevertheless chose not to register, so they could evade the critical regulatory oversight designed to protect investors and markets."

Our thought bubble: Coinbase did exactly the same thing — and also had its own staking product. If the SEC doesn't prosecute Coinbase along similar lines, it will leave itself open to accusations of having a double standard.

Zoom out: Coinbase has orders of magnitude more U.S. customers than FTX (now bankrupt) and Binance combined; it is also a publicly listed company, regulated by the SEC, with its stock trading on the Nasdaq exchange.

  • Coinbase shares fell 9% on Monday after the Binance complaint was unveiled.
  • Coinbase has repeatedly tried to make the case that when the SEC allowed it to go public, the regulator implicitly endorsed the crypto company's business. That argument seems increasingly untenable at this point.

The bottom line: The SEC looks like it's trying to set some clear precedents before going after Coinbase, the biggest kahuna in the U.S. market. If and when the SEC wins its case against Binance, expect Coinbase to be next.

2. Quoted: Bro talk

"We are operating as a fking unlicensed securities exchange in the USA bro."
— Binance's chief compliance officer, in 2018, according to the SEC complaint.

3. Catch up quick

🎥 Hollywood actors authorize strike as writers remain out. (Reuters)

⚠️ Climate change hits the insurance industry. (Axios)

4. Trouble at the ports

Shipping containers at the Port of Long Beach in California. Photo: Tim Rue/Getty Images

Operations at several West Coast ports were "throttled" Monday due to labor stoppages or slowdowns, the WSJ reported, as union contract negotiations between dockworkers and shipping companies dragged into a second year, Emily writes.

Why it matters: These kinds of work stoppages have disrupted operations at West Coast ports for months, pushing more shipping activity to the East Coast and raising painfully familiar concerns about supply chain disruptions.

Zoom out: Contract talks began in May 2022 between the International Longshore and Warehouse Union (ILWU), which represents more than 22,000 workers across 29 ports from Washington state to California, and the Pacific Maritime Association (PMA), which represents shipping companies and terminal operators.

  • The union contract covering those workers expired in July 2022.
  • This year there have been an increasing number of so-called worker actions at the ports — meaning union members fail to show up for work, or otherwise slow down operations, leading to sporadic shutdowns.
  • For example: In March, one local union branch stopped staggering worker mealtimes — which the PMA said forced the port to shut down activity for an hour during the afternoon and in the evening. The previous contract had provisions to ensure staggered mealtimes.
  • The disruptions Monday were in Los Angeles, Long Beach and the Port of Seattle, the WSJ reported. There were also stoppages in Oakland over this past weekend.

The big picture: While the economic impact of a daylong work stoppage is negligible, the drawn-out labor negotiations are tarnishing the West Coast ports' reputation as a reliable gateway of international trade, says Jock O'Connell, international trade adviser at Beacon Economics.

  • That's accelerating a long-term shift away from the West Coast, to the East Coast and Gulf Coast ports, he says.

What's next: The parties have ironed out a few issues — even coming to terms on automation — but the thorniest issue remains: wages.

  • The shipping industry saw astonishing profits over the past three years, and the unions want to see some of that money.

Go deeper

5. Stock market semantics

Illustration: Aïda Amer/Axios

The rally in stocks has some saying the bear market is nearly over. But we won't know for a while if that's right, Matt writes.

Why it matters: Nobody knows if we're in a new bull market, but the mere fact that we're talking about it underscores the momentum stocks seem to be gathering.

The latest: The S&P 500 is flirting with a 20% gain from the depths of the bear market. That drop entailed a peak-to-trough tumble of 25%.

  • The 20% rebound, some say, indicates the end of the gnarly bear market that began in early January 2022.

Be smart: Bull markets and bear markets are basically the term of art applied to periods when stocks are either largely going up (bull) or down (bear).

  • When and where they start and end are determined by a couple of highly unscientific rules of thumb, that are basically a form of market folklore.

How it works: When stocks fall 20% from a high, you're in a bear market.

  • Yes, but: To declare a bull market, it's not sufficient simply to have a 20% rise from a recent bottom — most market watchers say the market has to hit a new high.
  • The S&P 500 is currently about 10% below that level.

The bottom line: As we've said a lot recently, the market seems to be in surprisingly good shape. And we might even be in a new bull market. But we're waiting for that new high before we break out the Champagne.

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Axios Markets is edited by Kate Marino and copy edited by Mickey Meece.