Key points to remember
- The US SEC is suing Coinbase for various violations, such as failure to register as a national securities exchange, broker, and clearing agency, among others.
- Gensler said Coinbase also failed to provide adequate investor protection and proper registration of its staking program as a service.
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The US Securities and Exchange Commission (SEC) has sued leading cryptocurrency exchange Coinbase, alleging violations of national securities laws, following its announcement to sue Binance a day earlier.
The charges were filed in the U.S. District Court for the Southern District of New York and allege the crypto giant operated as a national securities exchange, broker, and unregistered clearing agency, as well as failing to d ‘register his staking as a service program, according to the SEC announcement.
Today we accused Coinbase, Inc. of operating its crypto asset trading platform as an unregistered national securities exchange, broker-dealer and clearing agency and of failing to register the offering and selling its crypto asset staking program as a service. pic.twitter.com/hCdVMw8B2v
— US Securities and Exchange Commission (@SECGov) June 6, 2023
Coinbase has reportedly racked up billions in profits by facilitating the buying and selling of crypto asset securities since 2019. Additionally, “Coinbase interweaves the traditional services of an exchange, broker, and clearing agency without have registered any of these functions with the Commission as required by law,” according to the press release.
Coinbase is also accused of providing a marketplace for securities transactions, carrying out transactions for customer accounts, and acting as an intermediary in the settlement of crypto-asset securities transactions. Coinbase’s lack of registration has failed to protect investors and maintain strong record-keeping protocols, while lacking measures to protect conflicts of interest, according on file:
“Coinbase has for years defied regulatory structures and evaded disclosure requirements that Congress and the SEC established for the protection of national securities markets and investors.”
The complaint goes further by suggesting that investors were denied protections due to Coinbase’s failure to register, pointing out that Coinbase Global Inc., Coinbase’s holding company, is also responsible for other violations.
Additionally, the SEC accused Coinbase of failing to register its crypto asset staking program as a service, allegedly offering this unregistered securities service since 2019. The SEC said Coinbase operates normal staking as a service. service, proof of participation program, however:
“Coinbase has not registered its bids and sales from this staking program as required by law.”
SEC Chairman Gary Gensler commented on the charges, stressing the importance of following established securities laws. “Coinbase’s alleged failures deprive investors of essential protections, including rules that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine SEC inspection,” Gensler said. .
If found guilty, Coinbase could face financial penalties, including “an injunction and restitution of ill-gotten gains plus interest.” The official case file reads as follows:
“Unless defendants are permanently restrained and enjoined, there is a reasonable likelihood that they will continue to engage in the acts, practices, transactions and course of business set forth in this complaint.”