The U.S. Securities and Exchange Commission sued Coinbase, the largest U.S. cryptocurrency trading platform, on Tuesday, alleging that the company violated securities laws by not registering as a broker.
The U.S.’s top securities regulator has filed a lawsuit the day after it sued the world’s largest cryptocurrency exchange Binance for mishandling customer funds and misrepresenting its operations to U.S. regulators and investors.
Coinbase Earned Billions By Promoting Crypto Assets, SEC said in a statementBut investors have been stripped of important protections.
The complaint, which was filed in federal court in Manhattan, warned investors that Coinbase’s approach to going public could be risky and that some of the products traded on its platform could be considered illegal. It claims that it was operating as an unregistered exchange despite being told that it was. Recognized as securities by regulatory authorities;
“You can’t just ignore the rules because you don’t like them or prefer different rules. The impact on ordinary investors is too great,” said SEC Enforcement Director Gerbil S. Grewal. increase. said in a statement.
The lawsuit against Coinbase has been long anticipated by the company and comes as company executives and crypto industry insiders want to change their view of digital assets.Coinbase Chief Legal Officer Paul Grewal is scheduled to testify on the draft before a House committee today. A bill regulating virtual currencies was submitted last week. Coinbase welcomes regulation, says it wants to work with SEC
But the company has also long criticized the agency, saying it is regulated by enforcement agencies and that the bill would send the message that lawmakers, not regulators, would set the rules. Mr. Grewal told lawmakers that the United States “is lagging behind the rest of the world in enacting sensible legislation” and that “the rest of the world is not waiting for us.” But he may instead face questions about the lawsuit against Coinbase.
The SEC lawsuit is the latest in a multi-year crackdown on the cryptocurrency market by regulators, following the collapse of the FTX cryptocurrency exchange in November and criminal charges filed against its founder Sam Bankman-Fried. The crackdown is gaining momentum.
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