2023-06-07 09:46:31 ET
The U.S. Securities and Exchange Commission (SEC) has launched a lawsuit against %Coinbase (), accusing the %Cryptocurrency exchange of operating as an unregistered broker.
The charges against Coinbase come a day after the Wall Street regulator charged rival crypto exchange Binance and its founder Changpeng Zhao with 13 counts of violating securities laws.
Coinbase’s main brokerage, exchange and staking programs violate securities laws, the SEC alleges in its complaint.
Specifically, the regulator claims that Coinbase “has for years defied the regulatory structures and evaded the disclosure requirements” of U.S. securities laws.
Coinbase’s service for institutional clients, its retail exchange, and its digital wallet each offer one or more crypto asset securities, according to the SEC charges.
Earlier this year, the SEC shut down the crypto staking service of digital exchange Kraken and it has also targeted several %Stablecoin issuers in recent months as part of a widening crackdown on the cryptocurrency sector.
Coinbase has strongly defended itself against growing calls to regulate it and other crypto firms, preparing for potential legal action by the SEC with a public advertising campaign.
Coinbase, which is the largest crypto exchange in the U.S. and second biggest in the world after Binance, is viewed as the only firm with the financial resources to fight back against the SEC.
The SEC is in the process of trying to label cryptocurrencies as securities and subject them to the same laws that govern stocks.
The SEC considers an asset to be a security if it meets three criteria: it is an investment in a common enterprise, with the reasonable expectation of returns, through the work of others.
Coinbase’s stock fell 12% on news of the SEC lawsuit. The company’s share price has declined 26% over the past 12 months and currently trades at $51.61 U.S. per share.