Crypto News

SEC Files Lawsuit Against Coinbase Following Binance Lawsuit


Crypto exchange Coinbase is facing a lawsuit filed by the Securities and Exchange Commission (SEC), alleging that the exchange facilitated the trading of “crypto asset securities” without registering with the SEC. According to the lawsuit, Coinbase combined the functions of brokers, exchanges, and clearing agencies, which are typically separate in traditional securities markets, without adhering to the disclosure requirements set by Congress.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, claims that Coinbase and CGI violated registration provisions outlined in the Securities Exchange Act of 1934. Additionally, the SEC accuses Coinbase of violating securities offering registration provisions stated in the Securities Act of 1933. The lawsuit designates SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO as securities.

The SEC also alleges that Coinbase failed to register its staking-as-a-service program, depriving investors of essential protections. Gary Gensler, the SEC Chair, emphasized that ignoring regulations has severe consequences for the investing public and stated that Coinbase must be held accountable for its choices.

The SEC’s lawsuit seeks injunctive relief, disgorgement of ill-gotten gains plus interest, penalties, and other equitable relief. This legal action against Coinbase follows a similar lawsuit filed against Binance by the SEC.

Coinbase Accused of Unlawfully Profiting Billions

Shortly after filing charges against Binance, the Securities and Exchange Commission has targeted crypto exchange Coinbase. According to the SEC, Coinbase never registered as a broker with the agency, and it evaded the disclosure requirements established for the securities market.

The SEC claims that Coinbase unlawfully made billions of dollars by facilitating the trading of crypto asset securities. The complaint alleges that Coinbase conducted these activities without registering its exchange, brokerage, or clearing agency services as required by law.

The SEC stated that Coinbase’s failure to register deprived investors of important protections, such as SEC inspection, recordkeeping obligations, and safeguards against conflicts of interest.

Furthermore, the lawsuit highlights Coinbase’s unregistered securities offering through its staking-as-a-service program. The consecutive legal actions taken by the SEC against major crypto players demonstrate the agency’s intent to enforce regulations in the crypto industry.

SEC Chair Gary Gensler Opposes Further Digital Currencies

During an appearance on CNBC, SEC Chair Gary Gensler expressed opposition to the proliferation of digital currencies, following the charges against Coinbase and Binance. Gensler cited Coinbase’s failure to provide critical investor protections as the basis for the charges, pointing out the alleged violations of U.S. securities laws.

The issue of regulation within the digital asset industry has been a contentious topic. Gensler’s statement comes as a response to the recent charges against two major cryptocurrency exchanges. The SEC has accused both Binance and Coinbase of operating as unregistered national securities exchanges, brokers, and clearing agencies.

Coinbase Receives Show Cause Notice from Ten U.S. States

After the SEC filed charges against Coinbase, the exchange has received a show cause notice from ten U.S. states. The Alabama Securities Commission issued the notice, giving Coinbase 28 days to justify why it should not be subject to a cease-and-desist order.

The ten states involved in issuing the notice are Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin. Coinbase is now at risk of facing a cease-and-desist order for the sale of unregistered securities.

Following the SEC’s charges, state regulators have turned their attention to Coinbase. The notice alleges that Coinbase violated securities laws by offering its staking rewards program to residents of the states involved.

Coinbase CEO Express

Creative Mind

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