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In the lawsuit, filed on Jun. 6, the SEC alleges that Coinbase has been operating as an unregistered exchange.
The SEC names Coinbase and CGI — Coinbase’s holding company — as defendants in the suit. The lawsuit alleges:
“Since at least 2019, through the Coinbase Platform, Coinbase has operated as: an unregistered broker, including by soliciting potential investors, handling customer funds and assets, and charging transaction-based fees; an unregistered exchange, including by providing a market place that, among other things, brings together orders of multiple buyers and sellers of crypto assets and matches and executes those orders; and an unregistered clearing agency, including by holding its customers’ assets in Coinbase-controlled wallets and settling its customers’ transactions by debiting and crediting the relevant accounts.”
The commission also claims that the Staking Program offered by Coinbase is in violation of the Securities Act of 1933 because “The Staking Program includes five stakeable crypto assets, and the Staking Program as it applies to each of these five assets is an investment contract, and therefore a security.”
Similar to the Binance suit filed on June 5, the SEC is alleging that Coinbase did not ensure that the crypto assets being sold were not securities as defined by the Howey test.
“But while paying lip service to its desire to comply with applicable laws, Coinbase has for years made available for trading crypto assets that are investment contracts under the Howey test and well-established principles of the federal securities laws,” the SEC claims.
In the suit, the SEC labels 13 crypto assets as securities, specifically SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO.
In the Binance lawsuit, the SEC named SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI, as well as Binance’s native tokens.
The lawsuit is the latest in an ongoing battle between Coinbase and the SEC. The exchange was served with a Wells Notice earlier this year, which led Coinbase to sue the SEC asking for regulatory clarity. When the court ordered the SEC to respond, it said that Coinbase could not make demands for regulatory clarity.
Coinbase did not immediately respond to requests for comment.
This is a developing story…