It’s “business as usual at Coinbase” while the crypto market waits for the exchange’s legal battle with the SEC to unfold over the coming months, possibly years. This week the Securities and Exchange Commission continued its crackdown on the crypto industry, suing the largest exchange in the world, Binance, on Monday only to go after the largest exchange in the U.S., Coinbase, the following day. The agency alleged Coinbase has been operating as an unregistered exchange, broker and clearing agency, and that its staking program violates securities laws. Coinbase shares fell more than 17% over the course of the week. Bitcoin rallied more than 3% between Tuesday and Friday, according to Coin Metrics and largely held onto its gains. Ether rallied as well but didn’t finish the week out as strong. Many hope the lawsuit will force some needed clarity around how crypto businesses should operate in a compliant manner. The outcome could either lay some groundwork for the young industry to thrive or in the worst case scenario, push it out of the U.S. altogether. In the meantime, here’s how crypto reacted to the news this week: Altcoin prices tumbled While bitcoin and ether got a little boost, there was more bloodshed in altcoin land after the SEC named several coins it said could be deemed securities. Among them were high-profile projects like Solana and Cardano, whose tokens lost 12% and nearly 14% between Tuesday and Friday, according to Coin Metrics. Polygon’s matic token dropped 12% and Axie Infinity fell 9%. The mentions did provide some clarity around the SEC’s point of view on what should be deemed a security, Jefferies pointed out in a note this week. They’re all able to be bought or sold for consideration, trade at the same price as another unit of the same asset, are equal in value to any other one token, and don’t give investors any special rights not available to other investors in that asset. The market cap of crypto ‘securities’ fell CryptoQuant’s “SECurities” index fell about 14% following the lawsuit, while the market cap of bitcoin and ether has basically remained flat. JMP noted that in the “securities” the SEC named, bitcoin and ether, which represented 55% of Coinbase’s trading volume in the first quarter, were excluded. “Coinbase has also been steadfast in its view that the assets listed on its platform do not fall under the scope of existing securities law, and we would note that other agencies (including the CFTC) and numerous legislators have differing opinions on the issue as well,” the firm said in a note this week. “Accordingly, we expect this to represent the core issue of the case and the key existential question for Coinbase’s business.” Coinbase outflows of crypto ‘securities’ spiked Outflows — the amount of coins withdrawn from an exchange’s wallets — and reserves in Coinbase for a number of the coins that were named in the SEC complaint spiked around the day of the lawsuit, and sometimes the day before, when the agency sued Binance and listed some of the same tokens, according to CryptoQuant. Coinbase saw outflows of about 20 million of Polygon’s matic token Tuesday afternoon, trading at about 73 cents by the end of the week. The popular gaming token Axie Infinity, trading at about $6, saw outflows of about 32,000 coins Monday afternoon. Meanwhile, Sports and entertainment coin Chiliz saw a spike in outflows Monday, Tuesday and Wednesday. DeFi token Voyager saw a big increase Monday and then again on Friday.