SEC Sues Coinbase for Operating an Unregistered Exchange, States Follow Up With Own Action
It's not been a good day for Coinbase (COIN) so far: The crypto exchange is being sued by the U.S. Securities and Exchange Commission (SEC), ten state regulators have the company in their sights, and Coinbase stock has dropped almost 14% in early trading.
According to the SEC's complaint, Coinbase violated U.S. securities laws by operating as an unregistered exchange, broker-dealer and clearing agency.
«We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions,” said SEC Chair Gary Gensler in a statement.
The SEC complaint also alleges Coinbase's staking program is akin to an unregistered security and investment contract, claiming that it allows investors to earn financial returns through Coinbase's managerial efforts.
The complaint said in a bid to boost its profits, the exchange sought to list more crypto assets, even suggesting that certain issuers remove „problematic language“ from the description of the crypto assets despite being „aware of the risk that it could be making available for trading on the Coinbase Platform crypto assets that were being offered and sold as securities.“
This legal action comes only a day after the SEC filed similar charges against Binance and its founder, Changpeng Zhao. Similar to the complaint against Binance, the SEC identified 13 assets listed on Coinbase as crypto asset securities. Alleged securities included in the Coinbase complaint that weren't included in the Binance complaint include Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), Near (NEAR), Voyager Token (VGX), Dash (DASH), and Nexo (NEXO).
A task force of ten states—Alabama, California, Illinois, Kentucky, Maryland, New
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