GEOFF BENNETT: The Securities and Exchange Commission announced today it's suing Coinbase, the largest cryptocurrency platform in the U.S.

It comes one day after the SEC announced its lawsuit against Binance, the world's largest cryptocurrency exchange, accusing it of lying to American regulators and investors about its operations.

Stephanie Sy has more.

STEPHANIE SY: Geoff, these are big players in the crypto world.

In its most recent suit, the SEC is accusing Coinbase of breaking federal law by acting as an exchange broker and clearing agency without being registered as any of them.

For more on the crisis in crypto, I'm joined by Roben Farzad, host of public radio's "Full Disclosure."

Roben, it's good to see you.

In the simplest of terms, please explain why the SEC is suing Coinbase and what it alleges.

ROBEN FARZAD, Host, "Full Disclosure": Coinbase was operating as an exchange, something that has been regulated, in fact, intensely for the better part of 90 years.

And if they want to do things, if they want to say, we operate outside the system, that's a world that they would like to occupy.

That's their world view.

But here you have the SEC chair coming in and saying, actually, these should be regulated securities.

They should be accompanied by offering statements, disclosures, various strings attached to the SEC.

And, clearly, that's anathema to the crypto world.

You kind of want to exist in this gray area, in this Wild, Wild West, if you will.

And I think between what happened yesterday and the announcement today, I think it's that the SEC is finally putting regulatory contours around this.

STEPHANIE SY: Yes, this is a $2 trillion industry that's been around for about 10 years.

The SEC chair, Gary Gensler, on CNBC this morning said, what Coinbase is doing would be like if the New York Stock Exchange was allowed to operate a hedge fund.

So could the outcome of this case, Roben, really tame the Wild West that crypto has been for the last decade?

ROBEN FARZAD: The Wild West aspects are, I mean, truly the most profitable elements, if -- I think if you look at the revenue model for Coinbase.

And it's had a pretty harsh two years.

In these various gray areas, such as staking, I mean, where you really have to read the fine print and the legend, it's like lending out stocks if you're part of a -- a client of a brokerage firm.

You have to opt into that are getting things on margin.

They roughly rhyme with what exchanges and wire houses do, the likes of Goldman Sachs and Schwab and others.

But Coinbase's offering here, it's saying that, if you regulate us such as this, it's going to kill the whole thing.

I mean, we're supposed to be deregulated.

And what is a token?

What is one of these non-Bitcoin things?

If it's not a commodity, it's kind of a meaning of life question.

Are we an ephemeral asset?

Do we even exist?

It -- in the case of the action you saw yesterday, the mysterious CEO says, I don't even have a headquarters.

It's wherever I'm putting up my laptop at my table.

So I think that's a -- it's actually on brand for the crypto companies to say, you don't quite understand us.

But, in the same voice, they're saying, if you do want to regulate us, at least put out a blueprint for us.

At least be transparent.

So you're seeing this kind of game of chess between regulators and the cryptos.

STEPHANIE SY: I mean, it does seem like smoke and mirrors to those of us that don't invest in crypto, but plenty of Americans do.

And Gensler pointed out that investors of all kinds, especially small amateur investors, invested a lot in crypto during the pandemic.

Have recent times shown they need, these investors, the same kind of protections that other investors in, say, securities would want?

ROBEN FARZAD: Yes, if you saw the implosion of FTX last year, if you saw what happened with very well-capitalized banks and bank runs, again, these things rhyme.

They're not necessarily apples to apples, but you could have situations where your liquidity is not available.

If you thought, OK, I want the best of both worlds, I want full access to things, I want access to other markets and exchanges, but I don't want it regulated, well, what happens when these crypto assets fall?

I mean, it's like, heads, I win, tails, you lose.

Do you want to be protected in the event of a downturn?

I mean, clearly, there's been tremendous, hyperbolic upside for crypto assets over the last decade.

But when things fall apart, I think that's when mom-and-pop investors or whatever you want to call them, stakeholders, want protections as well.

STEPHANIE SY: Yes, and don't even get me started on what happens if you forget the password to your digital wallet.

But, as you say, Roben, Coinbase says the digital asset industry lacks clear rules, and the company says it's planning to -- quote - - "defend its platform vigorously" against this lawsuit, so not expecting a settlement.

How do you expect things to play out?

ROBEN FARZAD: Well, I think the best case scenario for them is if the SEC can give them contours, can regulate them modestly, but not so much that it completely harshes the mellow of what they have going on, again, liquidity, high-volatility action, without regulators coming in, without being gummed up by offering statements and disclosures and Wells notices and the like.

That is so anathema to crypto.

I just don't see how they'd be profitable.

Certainly, the stock has reflected a catastrophic scenario over the last two years, coming down from euphoria, but today, down 12 percent, it's not exactly end of times for them.

STEPHANIE SY: Yes, and the stock is up 45 percent year to date, so investors seem like they think they might be able to fight this lawsuit.

Harshes the mellow, spoken like a true crypto bro.

Thank you so much, Roben Farzad, host of "Full Disclosure."

ROBEN FARZAD: Thank you.

STEPHANIE SY: Thank you.

ROBEN FARZAD: A pleasure.