The SEC sued Coinbase for violating securities rules

The US Securities and Exchange Commission (SEC) has sued Coinbase, the largest cryptocurrency exchange in the US, for violating securities rules, less than 24 hours after the regulator sued Binance over similar allegations.

See related article. Crypto industry reacts to SEC lawsuit against Binance

Fast facts

  • “The Coinbase platform combines three functions that are usually separated in traditional securities markets: brokers, exchanges and clearing agencies. However, Coinbase has never registered with the SEC as a broker, national securities exchange or clearing agency, thereby avoiding the disclosure regime that Congress has established for our securities markets,” the SEC said in its filing Tuesday in the Southern District Court. in New York.
  • In a press release issued on Tuesday, the SEC alleged that Coinbase has made billions of dollars by illegally facilitating the trading of crypto-asset securities since at least 2019.
  • The SEC said Coinbase’s failure to register exposed investors to SEC protections and conflicts of interest, among other risks.
  • The US regulator has been criticized by the digital asset industry for imposing fines and filing lawsuits against crypto exchanges. In February, the SEC fined US crypto exchange Kraken and shut down its crypto stake program. In April, the SEC charged Seattle-based crypto platform Bittrex with operating an unregistered exchange.
  • The SEC sent a Wells notice to Coinbase in March and said it was considering legal action against the Nasdaq-listed exchange over its stock services and other products. Coinbase sued the SEC in April and sought clearer crypto-regulations.
  • On Monday, the SEC sued Binance, its US affiliate and Chief Executive Officer Changpeng Zhao over allegations of securities violations. Binance has denied the allegations.
  • Shares of Coinbase fell as much as 22% in premarket trading Tuesday on the Nasdaq.

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