The US Securities and Exchange Commission (SEC) has filed a lawsuit against Coinbase, the biggest cryptocurrency asset trading platform in the US, for allegedly operating as an unregistered national securities exchange, broker, and clearing agency. The SEC alleged that by not registering as a broker, national securities exchange, or clearing agency, Coinbase did not provide investors with certain protections. These included SEC inspections, safeguards against conflicts of interest, and recordkeeping requirements. The agency claimed that Coinbase has made billions of dollars from transaction fees by “unlawfully facilitating the buying and selling of crypto asset securities” since at least 2019. The move comes one day after the SEC filed a complaint against Binance and its CEO Changpeng Zhao for allegedly skirting compliance measures and lying to investors and regulators.
“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,” said Gurbir S. Grewal, the director of the SEC’s Division of Enforcement.
Coinbase’s chief legal officer, Paul Grewal, is due to testify before a congressional committee in relation to a new crypto regulation that aims to be introduced. Coinbase has also received a notice from the SEC about potential securities law violations. Meanwhile, Coinbase is facing regulatory action at the state level by a task force comprising state regulators from ten states for allegedly violating securities laws.
