"We would not be surprised to see more lawsuits from the U.S [securities and exchange] regulators, and possibly the Department of Justice, in the next few weeks," said Scott Freeman, co-founder of JST Digital, a financial services firm focusing on digital assets.
While crypto companies started out in a regulatory gray area, the U.S. Securities and Exchange Commission [SEC] under the leadership of Gary Gensler has steadily asserted the agency's jurisdiction over the industry, arguing most tokens meet the definition of a security and should be subject to the same strict disclosure rules.
The agency has brought more than 130 crypto lawsuits and settlements to date, according to data from consultancy Cornerstone Research and the SEC website, and in several of those cases has named specific tokens as securities.
The Coinbase and Binance suits this past week expand that list to include some commonly traded tokens, such as Solana, Cardano and Polygon.
The SEC on Tuesday alleged Coinbase traded at least 13 crypto assets that are securities and which should have been registered, while on Monday it also accused Binance, the world's largest cryptocurrency exchange, of offering 12 cryptocurrency coins without registering them as securities.
Both Coinbase and Binance deny the SEC's allegations and have pledged to vigorously defend themselves in court. The SEC declined to comment.
The lawsuits expand the overall number of cryptocurrencies that the SEC has explicitly identified as securities. That raises questions about other exchanges that have also allowed U.S. investors to trade those tokens, such as Kraken, Gemini, Crypto.com and Okcoin, and whether they could be at risk of regulatory action, industry executives said. Some exchanges may look to de-list the tokens in question.
A spokesperson for crypto exchange Kraken said "We do not list securities. For every asset we list, our teams conduct thorough risk and security evaluations which includes a comprehensive legal and compliance process. We will continue to closely monitor this case and others for precedential rulings."
Gemini, Crypto.com and Okcoin did not immediately respond to a request for comment.
"All U.S. exchanges should now be on notice that they may be subject to enforcement action if they permit, or have permitted, these tokens to be traded," said Jason Allegrante, chief legal and compliance officer at Fireblocks, a digital asset infrastructure provider.
A spokesperson for crypto exchange Bitstamp said the company takes "all new regulatory developments very seriously" and is "currently reviewing the new information that has come out this week to determine what actions to take."
The latest lawsuits will play out in court, which could take years. An SEC suit alleging Ripple's XRP token is a security, for example, has been under litigation for more than two years.
But whether the SEC wins or loses, the suits send a strong signal to the industry that the agency is not going to let up, executives said. While big crypto companies can afford to fight the SEC, smaller companies have filed for bankruptcy following SEC enforcement actions, including crypto exchange Beaxy.
"I don't think that this SEC under this leadership necessarily cares whether they win or lose in the courts. I think what they are engaging in is a coordinated campaign to essentially destroy the crypto economy in the United States," Stuart Alderoty, chief legal officer at Ripple, told the Piper Sandler Global Exchange & Fintech Conference in New York on June 7.
Speaking to CNBC on June 6, SEC's Gensler suggested an industry shake-out would be good for investors.
"I think if there's a real value in these crypto tokens, then compliance will build trust and the business model might change," he said.