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SEC sues Coinbase for violating securities rules a day after Binance lawsuit

source-logo  forkast.news 06 June 2023 13:59, UTC

The U.S. Securities and Exchange Commission (SEC) has sued Coinbase, the largest cryptocurrency exchange in the U.S., for allegedly breaching securities rules, less than 24 hours after the regulator sued Binance on similar charges.

See related article: Crypto industry reacts to SEC’s lawsuit against Binance

Fast facts

  • “The Coinbase platform merges three functions that are typically separated in traditional securities markets—those of brokers, exchanges, and clearing agencies. Yet, Coinbase has never registered with the SEC as a broker, national securities exchange, or clearing agency, thus evading the disclosure regime that Congress has established for our securities markets,” the SEC said in its filing on Tuesday to the Southern district court of New York.
  • In a press release on Tuesday, the SEC alleged that Coinbase made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities since at least 2019.
  • The SEC said that Coinbase’s failure to register has deprived investors of SEC’s protections and safeguards against conflicts of interest, among other risks.
  • The U.S. regulator has been criticized by the digital assets industry for slapping fines and filing lawsuits on crypto exchanges. In February, SEC fined U.S. crypto exchange Kraken and shut its crypto staking program. In April, the SEC charged Seattle-based crypto platform Bittrex with operating an unregistered exchange.
  • The SEC issued a Wells notice to Coinbase in March and said it was considering legal action against the Nasdaq-listed exchange over its staking services and other products. Coinbase sued the SEC in April and sought clearer crypto regulations.
  • On Monday, the SEC sued Binance, its U.S. branch, and Chief Executive Officer Changpeng Zhao with charges related to securities violations. Binance has denied the allegations.
  • Coinbase shares on the Nasdaq fell as much as 22% during premarket trading on Tuesday.

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