SEC Accuses Coinbase Of Breaking Market Rules

Techspace - The Securities and Exchange Commission on Tuesday, May 6 sued Coinbase, the largest crypto trading platform in the United States, claiming that the company broke the law by not registering as a broker.

The lawsuit follows similar action against Binance earlier in the day, the country's top securities regulator, filing the lawsuit a day after accusing Binance, the world's largest cryptocurrency trading exchange, of mishandling customer funds and lying to American regulators and investors about its operations.

This was done in an intensified effort to end what violators see as an era of lawlessness in the cryptocurrency market.

In its filing Tuesday, S.E.C. details how Coinbase leaders have shown they know how the marketing and sale of digital assets should be regulated under US law, despite failing to follow suit.

There were 13 tokens named by the SEC which said Coinbase “has become available for trading crypto assets offered and sold as investment contracts, as well as securities.” Among them are tokens for Solana (SOL), the game Axie Infinity (AXS), blockchain Polygon (MATIC), the virtual world The Sandbox (SAND), and token “Chiliz” (CHZ) operated by token enthusiast company Socios.

In a statement, SEC chairman Gary Gensler said, "We allege that Coinbase, despite being subject to securities laws, aggregated and unlawfully offered the functions of a currency, broker-dealer, and clearinghouse."

In its complaint, the SEC said, “Since 2019 at least, through the Coinbase platform, Coinbase has operated as an unregistered broker… unregistered exchange… and unregistered clearing agent.”

“By shortlisting these functions into a single platform and failing to register with the SEC for any of the three functions, and not qualifying for the applicable purchase from registration, Coinbase has for years complied with regulatory compliance and avoided disclosure. requirements that have been created by Congress and the SEC to protect national securities markets and investors.”

Paul Grewal, Coinbase's chief legal officer and general counsel, said "The SEC's reliance on an enforcement-only approach without clear rules for the digital asset industry is hurting America's economic competitiveness and companies like Coinbase that have demonstrated a commitment to compliance."

“The solution is legislation that allows fair rules for roads to be built transparently and applied fairly, not litigation. In the meantime, we will continue to operate our business as usual," he added.

With these federal actions against major crypto companies, along with other lawsuits at the state level, regulators have sought to reshape the crypto sector by treating digital asset exchanges like more traditional financial companies, while pushing out individuals and companies they perceive as actors. wicked.

Coinbase went public in April 2021, an event that is seen as a milestone for crypto towards the mainstream. The company handled $830 billion worth of trades last year, with nearly nine million users making at least one trade per month.

SECOND. says Coinbase has made billions by reducing sales of crypto assets but depriving investors of significant protection. The complaint, which was filed in federal court in Manhattan, claims the company was operating as an unlisted exchange despite having advised investors in going public that regulators may consider some of the products marketed on its platform to be securities.

Coinbase maintains that its business model has the tacit approval of S.E.C. when the agency approves its initial public offering. The company says it is willing to work with S.E.C. but disagrees with its position that all digital assets offered on its trading platform must be registered securities, which requires increased scrutiny.

Coinbase went public in April 2021, an event that is seen as a milestone for crypto towards the mainstream. The company handled $830 billion worth of trades last year, with nearly nine million users making at least one trade per month.

S.E.C. says Coinbase has made billions by reducing sales of crypto assets but depriving investors of significant protection. The complaint, which was filed in federal court in Manhattan, claims the company was operating as an unlisted exchange despite having advised investors in going public that regulators may consider some of the products traded on its platform to be securities.

Coinbase maintains that its business model has the tacit approval of S.E.C. when the agency approves its initial public offering. The company says it is willing to work with S.E.C. but disagrees with its position that all digital assets offered on its trading platform must be registered securities, which requires increased scrutiny.

Coinbase went public in April 2021, an event that is seen as a milestone for crypto towards the mainstream. The company handled $830 billion worth of trades last year, with nearly nine million users making at least one trade per month.

S.E.C. says Coinbase has made billions by reducing sales of crypto assets but depriving investors of significant protection. The complaint, which was filed in federal court in Manhattan, claims the company was operating as an unlisted exchange despite having advised investors in going public that regulators may consider some of the products traded on its platform to be securities.

Coinbase maintains that its business model has the tacit approval of S.E.C. when the agency approves its initial public offering. The company says it is willing to work with S.E.C. but disagrees with its position that all digital assets offered on its trading platform must be registered securities, which requires increased scrutiny.

The move is consistent with S.E.C.'s long-standing view. that most crypto products are no different from stocks, bonds, and other securities. That means a company operating as an exchange and providing a platform for trading and selling crypto products must be registered like any exchange or broker that facilitates the trading of stocks or bonds.