The US Securities and Exchange Commission (SEC) has sued Coinbase for offering crypto assets that the SEC considers as securities. The lawsuit, filed on Tuesday in the US District Court for Southern New York, accuses Coinbase of not registering these assets as securities. Additionally, the SEC has accused the company of intermingling and unlawfully offering exchange, broker-dealer and clearinghouse functions. SEC Chairman Gary Gensler says Coinbase’s conduct has deprived investors of crucial protections, including safeguards against conflicts of interest, due disclosure, and routine SEC controls.
Furthermore, Coinbase has allegedly not officially registered its staking service, which serves as a middleman for customers who deposit money into the interest-bearing staking mechanisms of various coins. With staking, crypto exchanges validate a blockchain instead of using power-hungry mining. A statement from Coinbase regarding the SEC lawsuit was not immediately available.
Coinbase had taken a pugnacious stance back in March when it received a “wells notice” from the SEC, which is a notification with which the authority announces its intention to sue. In a blog post, Coinbase stated that the company had asked for sensible crypto rules for Americans, but instead received legal threats from the SEC.
Coinbase’s stock fell more than 15% at times on Tuesday following the lawsuit. Meanwhile, the SEC lawsuit against Binance caused the price to slide before this. The SEC accused Binance of violating US securities laws, operating as an unregistered exchange, and misusing investor funds. Among other things, Binance is accused of diverting billions of dollars in customer funds to a separate firm controlled by Binance CEO Changpeng Zhao.
Binance has emphasized that it had actively cooperated with the SEC from the beginning and would defend itself vigorously. However, the US capital markets authority CTFC had filed a civil lawsuit against Binance in March, accusing the crypto exchange of deliberately enabling terrorist financing and money laundering and automatically destroying evidence.
