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A day after filing lawsuit on crypto trading giant Binance, the US Securities and Exchange Commission (SEC) has sued Coinbase (NASDAQ: COIN) in the New York Federal Court on Tuesday, June 6.
It seems that the SEC has launched a blitzkrieg crackdown campaign on all of the top crypto trading platforms across the world.
In its 100-page complaint filing, the SEC noted that crypto exchange Coinbase evaded regulations by allowing users to ride numbers crypto tokens that were actually unregistered securities.
The SEC noted that tokens such as Solana SOL, Cardano ADA, Filecoin FIL, Polygon MATIC, The Sandbox SAND, Flow (FLOW), Internet Computer ICP, Near NEAR, and several other qualify as securities.
In the filing with the New York Federal Court, SEC Chair Gary Gensler wrote: “We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions. In other parts of our securities markets, these functions are separate. Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC. Further, as we allege, Coinbase never registered its staking-as-a-service program as required by the securities laws, again depriving investors of critical disclosure and other protections.”
Earlier this year, SEC has also accused crypto exchange Kraken for offering crypto staking services on its platform as unregistered securities. Kraken had to settle the matter by paying a steep $30 million in penalty.
The SEC wants Coinbase to follow securities laws and forfeit any unlawfully acquired profits, according to an order they are seeking. Earlier this year Coinbase was being investigated by the SEC, and on March 23, Coinbase announced that it had received a warning notice from the regulator about an upcoming enforcement action.
Reacting to the SEC’s filing of lawsuit against crypto exchange Coinbase, Binance chief Changpeng Zhao said: “If you have to pick a fight with everyone, maybe you are the one at fault”.
Several in the crypto community have started to question the SEC that why was Coinbase allowed to go public in 2021 if it has been violating securities laws, and that it operated as an unregistered securities broker.
Soon as the news broke out, the COIN stock entered a correction. At press time, it is trading 15.43% down at a price under $50. Also, the recent filing of lawsuit by the SEC has led to massive outflows from Binance and Coinbase.