US Securities and Exchange Commission (SEC) filed a lawsuit against the crypto exchange Coinbase a day after the start of proceedings with Binance.
The regulator claims that the platform violated securities laws. According to the agency, a number of tokens on the exchange fit this definition: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO.
The SEC said that Coinbase illegally combines three functions – as a broker, exchange and clearing agency – that are usually separated in traditional markets. The regulator also targeted the Coinbase Earn staking program.
“Coinbase has made billions of dollars illegally facilitating the buying and selling of securities. The company intertwines the traditional services of an exchange, a broker and a clearing agency, without registering any of these services with the Commission, as required by law, ”the lawsuit says.
According to the SEC, the lack of registration has deprived Coinbase customers of important protections, including regulatory scrutiny, record keeping requirements, and avoiding conflicts of interest.
According to the lawsuit, the holding company Coinbase Global Inc. is the controlling entity of the exchange, which means it is responsible for some of the company’s violations.
Against the backdrop of a complaint, shares of crypto exchanges sank 19% in a few hours, from $58 to $47. Most of the digital assets on the SEC list also showed a negative trend.
Bitcoin did not react as strongly to the news about the proceedings with Coinbase as after the lawsuit against Binance. According to CoinGecko, over the past hour, the price of the asset has not changed much. At the time of writing, the first cryptocurrency is trading at $25,530.
In March 2023 Coinbase received a notification from the regulator about an investigation into the listing procedure on the platform and its products – Coinbase Prime, Coinbase Wallet and the staking service Coinbase Earn.
On April 25, Coinbase filed a lawsuit to seek a response from the Commission on the July 2022 Petition. In it, the company demanded to clarify the regulation of the crypto industry.
The SEC called the firm’s claims “unfounded.” Officials indicated that the department is not required to issue new rules, and the company “does not have the right to sue the regulator.”
On May 22, Coinbase filed a new complaint with the SEC in order to get a response from the regulator to the July appeal.
The US Chamber of Commerce later came out in support of Coinbase and accused the regulator of “deliberately creating a dangerous and uncertain environment” for crypto companies in the country.
The SEC lawsuit against Coinbase, together with the lawsuit against Binance, confirms the Commission’s desire to show the entire community that the regulation of crypto projects in the United States is increasing, Andrey Tugarin, managing partner of GMT Legal, said in a comment to Cryplogger.
“If the regulator wins, Coinbase faces a temporary or permanent suspension of activities, as well as fines, which, of course, will affect their clients in the United States,” the lawyer said.
The lawyer found it difficult to predict the outcome of the proceedings, but stressed that regardless of the results, the SEC disputes with Coinbase and Binance will become significant precedents and will contribute to more transparent regulation of the cryptosphere in the United States.
“Now we see only general trends for tightening, but at the same time there are no clear rules and regulations – crypto companies do not understand how to behave in the American market. Perhaps the outcome of these disputes will allow us to develop more transparent and clear regulation, understanding for crypto projects whether it is possible to operate in the United States, and if so, how, ”he added.
Recall that on June 5, 2023, the SEC sued the bitcoin exchange and its CEO, Changpeng Zhao. The regulator brought 13 charges, including the sale of unregistered securities. The lawsuit also alleges that Binance failed to register its platform as an exchange, broker-dealer, or clearing agency, just like the US arm.
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Cryplogger Newsletters: Keep your finger on the pulse of the bitcoin industry!
US Securities and Exchange Commission (SEC) filed a lawsuit against the crypto exchange Coinbase a day after the start of proceedings with Binance.
The regulator claims that the platform violated securities laws. According to the agency, a number of tokens on the exchange fit this definition: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO.
The SEC said that Coinbase illegally combines three functions – as a broker, exchange and clearing agency – that are usually separated in traditional markets. The regulator also targeted the Coinbase Earn staking program.
“Coinbase has made billions of dollars illegally facilitating the buying and selling of securities. The company intertwines the traditional services of an exchange, a broker and a clearing agency, without registering any of these services with the Commission, as required by law, ”the lawsuit says.
According to the SEC, the lack of registration has deprived Coinbase customers of important protections, including regulatory scrutiny, record keeping requirements, and avoiding conflicts of interest.
According to the lawsuit, the holding company Coinbase Global Inc. is the controlling entity of the exchange, which means it is responsible for some of the company’s violations.
Against the backdrop of a complaint, shares of crypto exchanges sank 19% in a few hours, from $58 to $47. Most of the digital assets on the SEC list also showed a negative trend.
Bitcoin did not react as strongly to the news about the proceedings with Coinbase as after the lawsuit against Binance. According to CoinGecko, over the past hour, the price of the asset has not changed much. At the time of writing, the first cryptocurrency is trading at $25,530.
In March 2023 Coinbase received a notification from the regulator about an investigation into the listing procedure on the platform and its products – Coinbase Prime, Coinbase Wallet and the staking service Coinbase Earn.
On April 25, Coinbase filed a lawsuit to seek a response from the Commission on the July 2022 Petition. In it, the company demanded to clarify the regulation of the crypto industry.
The SEC called the firm’s claims “unfounded.” Officials indicated that the department is not required to issue new rules, and the company “does not have the right to sue the regulator.”
On May 22, Coinbase filed a new complaint with the SEC in order to get a response from the regulator to the July appeal.
The US Chamber of Commerce later came out in support of Coinbase and accused the regulator of “deliberately creating a dangerous and uncertain environment” for crypto companies in the country.
The SEC lawsuit against Coinbase, together with the lawsuit against Binance, confirms the Commission’s desire to show the entire community that the regulation of crypto projects in the United States is increasing, Andrey Tugarin, managing partner of GMT Legal, said in a comment to Cryplogger.
“If the regulator wins, Coinbase faces a temporary or permanent suspension of activities, as well as fines, which, of course, will affect their clients in the United States,” the lawyer said.
The lawyer found it difficult to predict the outcome of the proceedings, but stressed that regardless of the results, the SEC disputes with Coinbase and Binance will become significant precedents and will contribute to more transparent regulation of the cryptosphere in the United States.
“Now we see only general trends for tightening, but at the same time there are no clear rules and regulations – crypto companies do not understand how to behave in the American market. Perhaps the outcome of these disputes will allow us to develop more transparent and clear regulation, understanding for crypto projects whether it is possible to operate in the United States, and if so, how, ”he added.
Recall that on June 5, 2023, the SEC sued the bitcoin exchange and its CEO, Changpeng Zhao. The regulator brought 13 charges, including the sale of unregistered securities. The lawsuit also alleges that Binance failed to register its platform as an exchange, broker-dealer, or clearing agency, just like the US arm.
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Cryplogger Newsletters: Keep your finger on the pulse of the bitcoin industry!