The US Securities and Exchange Commission (SEC) has filed a lawsuit against New York-based cryptocurrency exchange Coinbase for offering unregistered securities.
The SEC lawsuit charges that Coinbase evaded the securities market's disclosure scheme by never registering as a broker, national securities exchange or clearinghouse. The SEC claims several tokens offered by cryptocurrency exchanges, including Solana, Cardano, Polygon , Filecoin, Sandbox, Axie Infinity, Chiliz (CHZ), Flow (flow), Internet computer(ICP), NEAR, Voyager Token (VGX), Dash and Nexo Qualifies as a security. The suit also charges that Coinbase has been operating as an unregistered securities broker since 2019, nearly two years before its April 2021 IPO.
The lawsuit charges that Coinbase's staking program includes five stackable crypto assets, making the staking program an investment contract and therefore a security. Coinbase has already engaged in a staking war with the SEC, claiming that its staking product does not qua alify as a security, even though Kraken previously settled with the SEC and terminated its staking service in the US.
Referring to the recent Coinbase lawsuit, SEC Chairman Gary Gensler said the cryptocurrency exchange allegedly deprived its customers of key protections against fraud and manipulation, and avoided proper disclosure and safeguards against conflicts of interest. Gurbir Grewal, d director of the SEC's Division of Enforcement, said : “As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities but will fully refused to comply with those laws”
Coinbase shares fell 15% in premarket trading after the SEC announced its lawsuit on June 6. The SEC's lawsuit against Coinbase comes a day after the securities regulator sued Binance for violating securities laws and misusing customer funds. While Binance ance has been charged with 13 counts of Violating various securities laws, the allegations against Coinbase have confused many in the crypto industry, largely because Coinbase is a public company.
Binance CEO Changpeng Zhao responded to Coinbase's lawsuit by taking a dig at the SEC. Many in the crypto community have questioned how Coinbase would be allowed to go public in 2021 if it was operating as an unregistered securities broker. The Wolf, a m ember of Crypto Twitter, said that the SEC's prosecution of Coinbase may bring some slack to Binance.
