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Coinbase Hit with SEC Lawsuit Over Unregistered Securities
The U.S. Securities and Exchange Commission (SEC) has unleashed another lawsuit against a major cryptocurrency exchange. Just one day after its assault on Binance, the SEC filed a massive 101-page lawsuit against Coinbase on June 6.
Today we charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency and for failing to register the offer and sale of its crypto asset staking-as-a-service program.https://t.co/XPG2gDkxtV pic.twitter.com/hCdVMw8B2v
— U.S. Securities and Exchange Commission (@SECGov) June 6, 2023
Among the allegations in the suit are that Coinbase operates as an unregistered broker, national securities exchange, and clearing agency, violating crucial disclosure requirements. According to the SEC, numerous tokens offered by Coinbase, including Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Sandbox (SAND), Chiliz (CHZ), FLOW, ICP, NEAR, VGX, DASH, and NEXO, qualify as securities.
Moreover, the SEC alleges that Coinbase has been functioning as an unregistered security broker since 2019, nearly two years prior to its highly anticipated initial public offering (IPO) in April 2021. The lawsuit further claims that Coinbase's staking program, involving five stackable crypto assets, qualifies as an investment contract and, therefore, a security.
Worth noting, Coinbase was sued by the SEC merely twenty-four hours after the SEC published a damning set of allegations against Binance, the world's largest crypto exchange. The accusations against Binance include being part of a "web of deception," evading U.S. laws, commingling client funds, and misleading investors and regulators.
After the SEC's actions spread, Coinbase Global (COIN) shares plunged 15.39% in pre-market trading, dropping to $49.68 in opening bell trading.
The ramifications of the SEC's lawsuits against two prominent exchanges have sent shockwaves through the cryptocurrency market. Despite stabilizing in overnight trade, Bitcoin prices remain close to a two-and-a-half-month low. Bitcoin's current trading price stands at $26,009, down 2.93% in 24 hours.