Coinbase sued over crypto violations, one day after SEC sued Binance
The Securities and Exchange Commission (SEC) has sued Coinbase, the largest US cryptocurrency exchange, for operating illegally by failing to register with the regulator. This marks the SEC’s second lawsuit against a major crypto exchange in two days, following its case against Binance and its founder, Changpeng Zhao. Both civil cases are part of SEC Chair Gary Gensler’s push to assert jurisdiction over crypto markets and protect investors while shoring up their trust in capital markets. The complaint alleges that the exchange has made billions of dollars since 2019 by operating as a middleman on crypto transactions, while evading disclosure requirements designed to protect investors. Coinbase shares fell by 13.9% to $50.53 in late morning trading.
FAQs
What is Coinbase?
Coinbase is the largest cryptocurrency exchange in the United States and serves over 108 million customers. It was founded in 2012 and recently ended March with $130 billion of customer crypto assets and funds on its balance sheet.
Why has the SEC sued Coinbase?
The SEC has sued Coinbase for operating illegally by failing to register with the regulator. The complaint alleges that the exchange has made billions of dollars since 2019 by operating as a middleman on crypto transactions, while evading disclosure requirements designed to protect investors.
What is the SEC’s motive behind suing Coinbase?
The SEC’s motive behind suing Coinbase is to assert jurisdiction over crypto markets and protect investors while shoring up their trust in capital markets.
Has Coinbase faced any other legal action besides the SEC’s lawsuit?
Ten states led by California are also taking legal action against Coinbase for alleged securities law violations. New Jersey has fined Coinbase $5 million for selling unregistered securities.
What does Coinbase’s general counsel say about the lawsuit?
Paul Grewal, Coinbase’s general counsel, stated that the company will continue operating as usual and has a “demonstrated commitment to compliance.”
Following SEC’s lawsuit against Binance, Coinbase gets sued for crypto breaches.
The Securities and Exchange Commission (SEC) has filed a lawsuit against Coinbase, the largest US cryptocurrency exchange, accusing it of operating illegally by failing to first register with the regulator. This marks the SEC’s second lawsuit in two days against a major crypto exchange, following its case against Binance, the world’s largest cryptocurrency exchange and founder Changpeng Zhao. These civil cases form part of SEC Chair Gary Gensler’s push to assert jurisdiction over crypto markets and protect investors while shoring up their trust in capital markets. “The crypto markets are undermining that trust, and I would say this: it undermines our overall capital markets,” Gensler told CNBC.
Coinbase, which recently served more than 108 million customers, has said SEC rules are unclear and that the regulator is overreaching by asserting oversight of their industry. However, the SEC said Coinbase traded at least 13 crypto assets that are securities that should have been registered, including tokens such as Solana, Cardano, and Polygon. Coinbase customers pulled more than $57m from the exchange within a couple of hours of the filing, according to data firm Nansen. Coinbase’s friction with Gensler dates back to 2021 when the SEC threatened to sue if Coinbase were to let users earn interest by lending digital assets. The company scrapped the idea.