Coinbase targeted by SEC in latest shot at crypto firms for allegedly skirting securities laws

NEW YORK — Coinbase has been targeted by U.S. regulators in a brand new lawsuit Tuesday that alleges the cryptocurrency platform is working as an unregistered securities platform and brokerage provider.

The lawsuit from the Securities and Exchange Commission comes just a day after it filed fees towards Binance, the sector’s greatest crypto trade, and its founder Changpeng Zhao are accused of misusing investor budget, working as an unregistered trade and violating a slew of U.S. securities laws.

Coinbase stocks plunged just about 15% early Tuesday.

In its grievance, the SEC mentioned Coinbase made billions appearing as the center guy for cryptocurrency patrons and dealers however didn’t give buyers lawful protections whilst appearing as a dealer.

“Coinbase has for years defied the regulatory structures and evaded the disclosure requirements that Congress and the SEC have constructed for the protection of the national securities markets and investors,” the SEC mentioned in its grievance, which was once filed in U.S. District Court for the Southern District of New York. It seeks injunctive aid, disgorgement of ill-gotten good points plus pastime, consequences, and different equitable aid.

Coinbase mentioned the SEC has now not been clear in the way it regulates cryptocurrencies.

“The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance,” said Paul Grewal, chief legal officer and general counsel for Coinbase, said in a written statement. The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual.”

The SEC had warned Coinbase in March that it could face securities charges and had long signaled that Coinbase had been flouting securities laws with its position that cryptocurrencies were not securities and therefore did not need to register as a broker.

“You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement, in a prepared statement.

U.S. prosecutors and the SEC charged FTX’s founder Sam Bankman-Fried with a bunch of cash laundering, fraud and securities fraud fees in December. His legal trial might be in the autumn.