Coinbase, America’s Largest Cryptocurrency Exchange, Sued By The SEC For Securities Violations
The Securities and Exchange Commission (SEC) has mandated Coinbase, one of the leading cryptocurrency exchanges, to act as an unregistered national securities exchange, broker, and clearing agency. the He also charged the SEC Coinbase for failing to register its staking as a-service of crypto assets. The complaint alleges that since 2019, Coinbase has facilitated the buying and selling of billions of dollars worth of crypto-asset securities without proper registration, combining the functions of an exchange, broker, and clearing agency.
The SEC claims that Coinbase’s failure to register denied investors basic protections such as SEC scrutiny, record-keeping requirements, and safeguards against conflicts of interest. The charges also extend to Coinbase’s holding company, Coinbase Global Inc. , because it is considered a control person and is therefore responsible for some of Coinbase’s violations.
In addition, the SEC alleges that Coinbase made an offering for unregistered securities through its staking-as-a-service program. This program allows customers to earn profits through blockchain transaction validation services. Coinbase allegedly collected customers’ storable crypto assets, performed necessary verifications, and rewarded customers with a portion of the rewards earned. The SEC states that Coinbase failed to record these offerings and sales as required by law.
Just yesterday, the Securities and Exchange Commission (SEC) sued Binance and its CEO CZ, alleging that the exchange violated securities laws, brazenly evaded SEC regulations, and failed to properly inform its consumers. The consolidation of the lawsuits within a couple of days indicates a major effort by US regulators to set a new tone for the regulation and enforcement of securities law on digital assets.
SEC Chairman Gary Gensler Criticize Coinbase allegedly denied important investor protections. Grewal, director of the SEC’s enforcement division, accused Coinbase of willfully refusing to follow federal securities laws, noting that the consequences for the investment public are significant.
Like the SEC’s complaint against Binance, the regulator is seeking an injunctive affidavit, revocation of ill-gotten gains, and penalties and other fair remedies. The investigation was conducted by the SEC’s Crypto Assets and Cyber Unit, with assistance from the San Francisco regional office and a multi-state task force of ten state securities regulators.
Coinbase has not yet publicly responded to the accusations. The outcome of this case will have major implications for the regulation of cryptocurrency exchanges in the US and could be a major shift for the growth of the industry in the country. It is important to note this SEC President Gary Gensler is registered As a distinction between bitcoin and cryptocurrencies in general, and saying that bitcoin alone is a commodity. Bitcoin-focused and retail users should not feel at risk from regulation like the securities-focused actions seen this week.
