The SEC has filed a lawsuit against Coinbase
In a legal action brought forth on June 6, the U.S. Securities and Exchange Commission (SEC) charges that cryptocurrency exchange Coinbase has been conducting business as an unregistered exchange.
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Coinbase and Coinbase Global Inc. (CGI), its holding company, are identified as defendants in the lawsuit.
The SEC accuses Coinbase of functioning as an unregistered broker since 2019 via its platform. The platform's alleged activities include soliciting potential investors, managing customer assets, charging transaction-based fees, and providing a marketplace for crypto assets by matching and executing buyers' and sellers' orders. Moreover, Coinbase is claimed to have acted as an unregistered clearing agency, maintaining customers' assets in its control and settling transactions.
Additionally, the SEC contends that Coinbase's Staking Program breaches the Securities Act of 1933. The program, which features five stakeable crypto assets, is deemed to be an investment contract and thus classified as a security.
The SEC's allegations against Coinbase mirror those levelled against Binance in a suit filed on June 5. The SEC argues that Coinbase failed to verify that the crypto assets being traded were not securities as per the Howey test.
In its claims, the SEC asserts that while Coinbase professes a commitment to comply with pertinent laws, it has for years allowed trading in crypto assets that qualify as investment contracts under the Howey test and established federal securities laws.
This lawsuit represents another episode in the ongoing conflict between Coinbase and the SEC. Coinbase received a Wells Notice earlier this year, prompting the exchange to sue the SEC for regulatory clarity. The SEC replied to the court order stating that Coinbase could not demand regulatory clarity.
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