SEC Accuses Coinbase of Unregistered Brokerage and Securities Violations
In a continuing crackdown on digital currency platforms, the US Securities and Exchange Commission (SEC) has set its sights on Coinbase, a prominent San Francisco-based exchange. The SEC's lawsuit claims that Coinbase has flouted numerous securities regulations and operated as an unregistered broker since 2019.
Coinbase Faces Lawsuit for Unregistered Brokerage and Multiple Securities Offenses
Coinbase finds itself in the hot seat as the SEC accuses the exchange of functioning as an unregistered broker and violating various securities laws. While Coinbase claims to have diligently evaluated crypto assets for compliance with regulatory standards, the SEC argues that the company has listed cryptocurrencies that fail the crucial Howey test or can be categorized as investment contracts.
The SEC asserts that several coins, including ICP, AXS, CHZ, FLOW, DASH, VGX, FIL, NEXO, NEAR, ADA, SAND, SOL, and MATIC, meet the criteria of investment contracts.
SEC Chair Gary Gensler stated, “We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered an exchange, broker-dealer, and clearing house functions.”
Gensler further added, "Coinbase failed to register its staking-as-a-service program as required by securities laws, again depriving investors of crucial disclosure and other protections."
Allegations of Unlawful Operations and Lack of Investor Protection
The SEC takes particular issue with Coinbase's staking platform, claiming that the company never submitted adequate documentation to regulators to offer such services. This failure led to Coinbase withholding vital information about the program from investors while violating registration provisions under the Securities Act of 1933. Consequently, the global crypto markets have experienced a 4.4% decline over the past 24 hours, with the total market cap currently hovering around USD 1.13 trillion.
Coinbase's stock has taken a significant hit, plummeting nearly 16% since the SEC's legal action. During pre-market trading sessions, shares fell to USD 58.71 per share. However, despite this setback, Coinbase's stock has seen a 1.04% increase over the past month and an impressive 38.42% surge over the past six months. Echoing the recent allegations against Binance, the SEC underscores that Coinbase operated multiple entities without the necessary registration and listed crypto assets that the regulator deems securities.
What are your thoughts on the SEC's legal action against Coinbase? Please share your opinions and insights about this ongoing development in the comments section below.
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