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This comes a day after the SEC also sued Binance and its CEO Changpeng Zhao as the US cracks down on the crypto sector.
The US Securities and Exchange Commission (SEC) has sued crypto exchange platform Coinbase for allegedly operating as an “unregistered national securities exchange, broker and clearing agency”.
According to the complaint filed in a New York court, Coinbase allegedly made “billions of dollars unlawfully” by facilitating the trading of crypto asset securities since at least 2019.
“Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the commission as required by law,” the SEC wrote in a statement today (6 June).
This, the regulator believes, has “deprived investors of significant protections”, including inspection by the SEC, record-keeping requirements and safeguards against conflicts of interest. The complaint is also against Coinbase Global, the company’s holding company.
The legal action comes just a day after the SEC also sued Binance, the world’s largest crypto exchange, and its CEO Changpeng Zhao for allegedly letting high-value US customers continue trading on the Binance.com platform despite public claims that US customers were restricted.
“You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” Gurbir Grewal, director of the watchdog’s enforcement division, said of the latest lawsuit against Coinbase.
According to Grewal, Coinbase was “fully aware” of the applicability of the federal securities laws to its business activities but “deliberately refused” to follow them.
“While Coinbase’s calculated decisions may have allowed it to earn billions, it’s done so at the expense of investors by depriving them of the protections to which they are entitled. Today’s action seeks to hold Coinbase accountable for its choices.”
Coinbase secured regulatory approval to operate as a virtual asset service provider in Ireland last December. This came weeks after the crypto exchange announced Cormac Dinan as its country leader for Ireland.
Last month, updated its subscription service – called Coinbase One – and expanded access to Ireland, eyeing a European expansion amid regulatory turbulence across the pond.
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