The Securities and Exchange Commission accuses Coinbase of running its crypto asset trading platform as an unlicensed broker, clearing agency, and national securities exchange.
Additionally, Coinbase was accused of not registering the offer and sale of its program for staking digital currency assets.
Users of trading platforms can “stake” their bitcoin, effectively locking up some of their assets in exchange for payment later.
This works similarly to earning interest on a savings account.
Platforms like Coinbase Global use these assets to back up other blockchain transactions. Coinbase has criticized staking laws, calling them ambiguous.
Additionally, Coinbase Global Inc., the holding company for Coinbase, is claimed to be a control person of Coinbase and is also accountable for sure of Coinbase’s violations in the SEC complaint.
Before Tuesday’s market opened, shares of Coinbase Global fell by about 17%.
The SEC claims in its complaint that Coinbase has generated billions of dollars illegally since at least 2019 by facilitating the buying and selling of crypto asset securities.
IN MARCH, the SEC had previously warned Coinbase that it could face securities charges.
The agency asserts that without legally needed registration with the commission, Coinbase simultaneously performs the traditional activities of exchange, broker, and clearing agency.
“While Coinbase may have made billions due to its well-considered choices, it did so at the price of investors by denying them the rights to safeguards they are due. The SEC’s Division of Enforcement head, Gurbir Grewal, stated in a statement on Tuesday that the goal of the action taken today is to make Coinbase answerable for its decisions.
Requests for comment from Coinbase did not immediately receive a response.
The SEC filed a lawsuit there—the Southern District of New York’s district court.
In addition to other equitable measures, it asks for injunctive relief, the disgorgement of ill-gotten gains, and interest and penalties.
One day before the announcement, the SEC sued Binance and its founder Changpeng Zhao, alleging that they had violated many U.S. securities laws, operated an unregistered exchange, and misappropriated investor funds.
Binance stated on social media that it has been assisting the SEC with its probe but claimed that the organization “chose to act unilaterally and litigate.”
The charges against Zhao’s Cayman Islands limited liability company, Binance, the largest cryptocurrency exchange in the world, are similar to those identified after the collapse of FTX, the second-largest cryptocurrency exchange, last year.
In December, Sam Bankman-Fried, the creator of FTX, was accused by US prosecutors and the SEC of several money laundering, fraud, and securities fraud offenses.
The fall is most likely the time of his criminal trial.
JOIN US ON WHAT'SAPP, TO GET INSTANT STATUS UPDATES AND BE IN THE KNOW.
CLICK HERE
