SEC sues Coinbase, one day after taking aim at Binance
The Securities and Exchange Commission accused the cryptocurrency platform Coinbase of operating as an unregistered securities broker, putting investors at risk of fraud and manipulation, in a lawsuit filed Tuesday.
It was the federal regulator’s second action in as many days against a major cryptocurrency player amid a broadening industry crackdown. On Monday, it sued Binance, the world’s largest crypto exchange, alleging it violated securities laws and made false statements to investors.
On Tuesday, the SEC accused Coinbase of performing the functions of a securities exchange, broker and clearing agency – entities that have expansive reporting requirements – since at least 2019. The lawsuit, filed in U.S. District Court for the Southern District of New York, asked for unspecified civil penalties along with the forfeiture of any ill-gotten gains, as well as a permanent injunction from violating SEC rules.
“Coinbase’s alleged failures deprive investors of critical protections, including rule books that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC,” the commission’s chairman, Gary Gensler, said in a statement.
Coinbase rejected the allegations in a March 22 blog post signed by chief legal officer Paul Grewal, entitled “We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead.” The platform was notified at the time of impending legal charges.
The platform said the SEC delivered its lawsuit after a “cursory investigation,” and emphasized that trading services will not be disrupted by legal proceedings.
“We are confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets,” Grewal wrote. “Rest assured, Coinbase products and services continue to operate as usual - today’s news does not require any changes to our current products or services.”