The U.S. Securities and Exchange Commission on Tuesday sued crypto exchange Coinbase on the charges of violating securities law, just a day after filing a similar lawsuit against Binance.
Coinbase stock saw a rapid fall on the back of this news, with the price falling about 19% from the previous close. Stock was trading at $47.86 at the time of writing, down from previous close of $58.70.
The SEC mentions two entities in the form of Coinbase and Coinbase Global in the filing. The complaint has no mention of Coinbase CEO Brian Armstrong.
The SEC alleges in the filing that, “Coinbase has acted as an exchange, a broker, and a clearing agency, without registering as an exchange, broker, or clearing agency.” The complaint added that Coinbase solicited customers, handled orders, allowed for bids and acted as an intermediary all at once.
Coinbase, in an emailed statement to ForWebThree, said that SEC’S enforcement approach to the digital asset industry in absence of clear rules is hurting the American economic competitiveness.
Chief Legal Officer and General Counsel, Paul Grewal, said in the statement,” The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual.”
SEC’s case against Coinbase has made clear that the regulator is on a warpath against crypto exchanges and the crypto space in general. Coinbase lawsuit comes shortly after a similar lawsuit against world’s largest exchange Binance, which can only be seen as a coordinated effort to strike at the industry.
SEC alleges in the complaint that Coinbase was well aware of the nature of cryptocurrencies that it was offering and despite that, continued to offer them in lieu of gaining profits. SEC also alleges that Coinbase led and operated a Staking program for its users without having ever registered for the same with the regulators.