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The chair of the Securities and Exchange Commission, Gary Gensler, just went all in. After years of dithering, Gensler instructed his agency to send Coinbase a Wells Notice—a corporate nastygram that means “knock it off or we’re going to sue you.” The full contents of the document are not public, but Coinbase suggested on Wednesday that the SEC is coming not just for its staking business—a small but important crypto niche—but that it also objects to the company selling digital tokens, which is the core of its business.

For Gensler, this is a point of no return. He has declared he wants to take down the big dog. For Coinbase, the looming litigation is an existential threat. If the company shutters its staking service and chooses to delist everything that might be a security—recall that Gensler’s latest position is that every digital asset save for Bitcoin is a security—then it will have to shut its doors, or else pull up stakes from its native country and decamp to Dubai, Paris, or Hong Kong instead.

It’s shaping up to be a fight to the death, in other words, and it’s hard to see how both Gensler and Coinbase can come out alive. Either the SEC drives the company from American shores or Gensler loses in court—note Coinbase has indicated it will litigate to the hilt—and he suffers a humiliating setback that will weaken the SEC and destroy his own political ambitions.

It didn’t have to be this way. Coinbase CEO Brian Armstrong could have learned to play the Washington, D.C., game better and quicker, and won the company warmer relations with the SEC and more friends in Congress and the White House. It also didn’t help that Armstrong has in the past taunted the SEC on Twitter, which felt like an amateur move. Can you imagine the CEO of JPMorgan trolling the Treasury Secretary on Instagram, or the head of Ford mocking the EPA with a TikTok dance?

But ultimately it is Gensler, not Armstrong, who deserves the most blame for the current showdown. For years, Coinbase and other responsible players from the industry have turned up at the agency’s door with ideas for creating a regulatory framework that would protect investors while allowing the U.S. to benefit from the enormous potential of blockchain technology. But Gensler has shown no signs of considering these ideas in good faith and acting as an impartial regulator. Instead, he has taken a blatantly political approach to running the SEC in hopes of further climbing the Washington ladder.

How this ends is anyone’s guess. Gensler is likely to benefit from the broad anti-crypto sentiment that followed the collapse of FTX—a sentiment that federal judges, most of whom are old and have never touched crypto, may likely feel as well. On the other hand, the current state of the law as to what is and isn’t a security is totally incoherent so there is a good chance Coinbase and its allies could prevail in court. But whatever happens, it feels like there can only be only one winner here.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

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