The Securities and Exchange Commission (SEC) has sued cryptocurrency exchange Coinbase for allegedly violating securities laws.
The federal lawsuit, filed Tuesday (June 6), comes one day after the SEC took similar action against crypto giant Binance. It also marks the latest step in the agency’s ongoing conflict with Coinbase, the largest crypto platform in the United States.
Reached for comment by PYMNTS Tuesday morning, a Coinbase spokesperson said the company would issue a response to the SEC’s lawsuit “soon.”
According to the suit, Coinbase has, since 2019, “made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities,” per a press release.
The agency alleged the company “intertwines the traditional services of an exchange, broker and clearing agency” without registering those functions with the SEC, as the law requires.
In doing so, the complaint said, Coinbase has prevented investors from gaining “significant protections,” such as SEC inspections, recordkeeping requirements, and safeguards to prevent conflicts of interest.
“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 S. Grewal, director of the SEC’s Division of Enforcement, said in the release. “…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.”
PYMNTS wrote last month that the dynamics between the SEC and Coinbase had “curdled substantially” since 2022, with the SEC ramping up enforcement and Coinbase continually saying that the U.S.’s crypto regulations are unclear.
Coinbase sued the SEC in April to force it to respond to its rulemaking petition, arguing in a court filing that it was “unreasonable for the SEC — an agency with over 4,500 employees — to take nine months (and counting) to complete that simple task.”
Also last month, Coinbase unveiled an international cryptocurrency exchange to allow institutional users based in eligible jurisdictions outside of the U.S. to trade perpetual futures.
The SEC’s action is part of a broader move to regulate the crypto sector, including its recent case against Binance, the largest crypto exchange in the world.
The SEC filed 13 charges Monday (June 5) against Binance and its founder Changpeng Zhao, with SEC Chair Gary Gensler alleging that Zhao and the company “engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law.”
Binance replied in a blog post that it was “disappointed” with the SEC’s action and said it would “vigorously” defend its platform.
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