The United States Securities and Exchange Commission (SEC) has filed a lawsuit against the publicly-traded cryptocurrency exchange, Coinbase. This comes only a day after the agency sued the leading crypto trading firm, Binance.
Coinbase Allegedly Breaks Securities Laws
The SEC in its complaint, claims that Coinbase violated securities laws by operating as an unregistered securities “exchange, broker, and clearing agency” as far back as 2019. The regulatory agency mentioned that the exchange gained billions of dollars from facilitating the trading of cryptocurrencies, which it terms as security.
The regulator also alleged that Coinbase’s offerings which allowed users to stake and earn rewards on cryptocurrencies, constitute an illegal securities sale. Recall that Coinbase’s CEO Brian Armstrong had earlier echoed his stance on the issue of crypto staking, where he declared his readiness to support the product even in court.
U.S. SEC Chair Gary Gensler pointed out that Coinbase’s failure to register its services is to the detriment of its customers.
“Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC. Further, as we allege, Coinbase never registered its staking-as-a-service program as required by the securities laws, again depriving investors of critical disclosure and other protections,” he said.
U.S. SEC vs. Crypto Exchanges
Today’s regulatory action against Coinbase comes hot on the heels of the SEC’s lawsuit filed against Binance on Monday. Despite remarkable differences in the allegations against what are arguably the two largest cryptocurrency exchanges, the SEC maintains its stance that several cryptocurrencies are securities under U.S. laws.
Kraken, another popular cryptocurrency exchange, had previously faced its share of the legal tussle against the U.S. SEC. In February, the exchange was sued by the regulatory watchdog over charges of facilitating sales of unregistered securities.
The crypto exchange eventually agreed to pay $30 million as a settlement fee. It also complied with the agency’s view of staking services by shutting down its staking feature.
