SEC Brings Charges Against Coinbase for Operating as Unregistered Securities Exchange, Echoing Binance Lawsuit
In Brief
Following Monday’s case filed against Binance, the SEC is now bringing charges against Coinbase.
The SEC alleges that Coinbase is operating as an unregistered national securities exchange, broker, and clearing agency.
Coinbase is also charged for failing to register its crypto asset staking-as-a-service program.
Following Monday’s case filed against Binance, the U.S. Securities and Exchange Commission is now bringing charges against Coinbase.
In a case filed today with the United States District Court in New York, the SEC accused Coinbase of operating as an unregistered national securities exchange, broker, and clearing agency. The regulatory agency also charged Coinbase for not registering the offer and sale of its crypto asset staking-as-a-service program.
This lawsuit comes as no surprise as the SEC issued Coinbase a Wells notice in March, warning the exchange that it potentially violated securities law. Speaking to CNBC, Coinbase CEO Brian Armstrong said: “We’ve met with them over 30 times in the last year … never got a single piece of feedback from them about what we can be doing better or differently, and then this Wells Notice arrived.”
Armstrong added that the regulators’ responsibility is to publish a clear rulebook and enable the market to be both secure and thriving in the country, but he believes that they have completely relinquished this responsibility.
According to the SEC’s complaint, Coinbase is accused of unlawfully generating billions of dollars by facilitating the trading of crypto asset securities since 2019. The SEC claims Coinbase combines the roles of an exchange, broker, and clearing agency, without fulfilling the registration requirements with the Commission as mandated by law.
The SEC alleges that Coinbase provided the following unregistered services:
- A marketplace that brings together the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interact;
- Facilitating securities transactions for the accounts of Coinbase customers;
- Helps people compare settlement terms for crypto asset securities, acts as an intermediary to facilitate transactions, and also serves as a secure place to store these securities.
The SEC also alleges that the following tokens are securities: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO. Following the filing of today’s lawsuit, the prices of SOL, ADA, MATIC, AXS, FLOW, and NEXO are seeing a decline ranging from 1% to 4% so far today. FIL, CHZ, ICP, NEAR, DASH have seen growth in the same range while VGX is stable.
According to Nansen, users have withdrawn over $57.7M across multiple chains from the exchange, excluding Bitcoin, in the hour since the SEC announced its lawsuit against Coinbase.
In response to SEC Chair Gary Gensler’s tweet on the matter, web3 influencer exlawyer.eth on said on Twitter:
“Gary, the SEC approved Coinbase’s IPO, with full knowledge of Coinbase’s business model and after seeking clarification on CB’s operations on multiple occasions. If CB was not compliant with the law, the SEC should not have approved it to become a publicly traded company in the first place.”
After the SEC complaint against Binance on Monday, Coinbase stock fell 9%. The stock plummeted nearly 20% pre-market from a previous close of $58.70 to a market open of $47.23 today.
Read more:
- Binance vs. Coinbase: What you need to know in 2023
- Coinbase NFT Marketplace is Finally Live: Will It Beat OpenSea?
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About The Author
Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via [email protected] with press pitches, announcements and interview opportunities.
More articles
Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via [email protected] with press pitches, announcements and interview opportunities.
