Key Points
- The U.S. SEC has gone after crypto exchange Coinbase, a day after filing one against Binance.US and its founder, Changpeng Zhao.
- The US SEC’s new crypto lawsuit against Coinbase has sent the exchange’s stocks down to 13% at the time of writing.
Coinbase faces a crypto lawsuit from SEC
U.S. SEC has filed a crypto lawsuit against Coinbase Exchange less than a day after suing Binance.U.S. The new lawsuit comes as a climax of the tension that has been there between the regulator and Coinbase for the past several months.
The U.S. SEC had sent a Wells Notice to Coinbase alleging that it had been breaking several rules under its jurisdiction. The notice warned that the regulator could press charges against the exchange if those services continued being offered in the U.S. without its approval.
The tension began when CEO Brian Armstrong hit back, saying that his organization had sought clearance with the SEC before opening for business in the country and was granted permission. Therefore, a crypto lawsuit, later on, could be groundless and ridiculous.
Armstrong said that his team was ready to challenge the SEC in court. Now, the SEC has served the exchange on claims that it acts as an unregistered securities broker in the nation. An excerpt from the lawsuit reads:
“The Coinbase Platform merges three functions that are typically separated in traditional securities markets—those of brokers, exchanges, and clearing agencies. Yet, Coinbase has never registered with the SEC as a broker, national securities exchange, or clearing agency, thus evading the disclosure regime that Congress has established for our securities markets. All the while, Coinbase has earned billions of dollars in revenues by, among other things, collecting transaction fees from investors whom Coinbase has deprived of the disclosures and protections that registration entails and thus exposed to significant risk.”
The SEC continues to say that Coinbase has been
“Operating as: an unregistered broker, including by soliciting potential investors, handling customer funds and assets, and charging transaction-based fees; an unregistered exchange, including by providing a market place that, among other things, brings together orders of multiple buyers and sellers of crypto assets and matches and executes those orders; and an unregistered clearing agency, including by holding its customers’ assets in Coinbase-controlled wallets and settling its customers’ transactions by debiting and crediting the relevant accounts.”
By the time of writing, Coinbase had not replied to the matter and did not reply to a query by Fintech Express regarding the crypto lawsuit on time. Keep watching for updates on regulation and other Fintech-related updates.