US SEC sues Coinbase, one day after suing Binance
Last edited Tue Jun 6, 2023, 06:43 PM - Edit history (3)
Source: Reuters
NEW YORK, June 6 (Reuters) - The U.S. Securities and Exchange Commission on Tuesday sued Coinbase (COIN.O), accusing the largest U.S. cryptocurrency platform of operating illegally because it failed to register as an exchange, in another blow to the crypto industry.
The lawsuit is the SEC's second in two days against a major crypto exchange, following its case against Binance, the world's largest cryptocurrency exchange, and founder Changpeng Zhao. Both civil cases are part of SEC Chair Gary Gensler's push to assert jurisdiction over the crypto industry, which he on Tuesday again labeled a "Wild West" that has undermined investor trust in the U.S. capital markets.
"The whole business model is built on a noncompliance with the U.S. securities laws and we're asking them to come into compliance," Gensler told CNBC. Crypto companies say the SEC rules are unclear, and that the agency is overreaching by trying to regulate them. Coinbase suffered about $1.28 billion of net customer outflows following the lawsuit, according to initial estimates from data firm Nansen.
Paul Grewal, Coinbase's general counsel, in a statement said the company will continue operating as usual and has "demonstrated commitment to compliance." Ten U.S. states led by California also on Tuesday accused Coinbase of securities law violations concerning its staking rewards program.
Read more: https://www.reuters.com/legal/us-sec-sues-coinbase-over-failure-register-2023-06-06/
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Both civil cases are part of SEC Chair Gary Gensler's push to assert jurisdiction over the crypto industry, which he on Tuesday again labeled a "Wild West" that has undermined investor trust in the U.S. capital markets.
"The whole business model is built on a noncompliance with the U.S. securities laws and we're asking them to come into compliance," Gensler told CNBC. Crypto companies say the SEC rules are unclear, and that the agency is overreaching by trying to regulate them.
Paul Grewal, Coinbase's general counsel, in a statement said the company will continue operating as usual and has "demonstrated commitment to compliance." Ten U.S. states led by Californiaalso on Tuesday accused Coinbase of securities law violations concerning its staking rewards program.
Both cases are part of SEC Chair Gary Gensler's push to assert jurisdiction over crypto and offer better protection to investors who trade virtual currencies. "Coinbase's alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection," Gensler said in a tweet.
Coinbase did not immediately respond to a request for comment. Shares of its parent Coinbase Global Inc, which is also a defendant, fell 17.1% in premarket trading. In a complaint filed in Manhattan federal court, the SEC said Coinbase has since at least 2019 made billions of dollars by handling cryptocurrency transactions, while evading the disclosure requirements meant to protect investors.
The lawsuit addressed several aspects of Coinbase's business including Coinbase Prime, which routes orders; Coinbase Wallet, which lets investors access liquidity; and the Coinbase Earn staking service.
Original article/headline -
NEW YORK, June 6 (Reuters) - The U.S. Securities and Exchange Commission on Tuesday sued Coinbase Inc (COIN.O), the largest U.S. crypto asset trading platform, accusing it of illegally operating without having first registered with the regulator.
The lawsuit was filed in Manhattan federal court, one day after the SEC sued Binance, the world's largest cryptocurrency exchange, and its founder Changpeng Zhao.
