SEC sues Coinbase ── Following Binance the day before | CoinDesk JAPAN | Coin Desk Japan

The U.S. Securities and Exchange Commission (SEC) has sued major U.S. cryptocurrency exchange Coinbase for violating federal securities laws. The day before, it filed a similar lawsuit against Binance.

According to the SEC, Coinbase operated an unregistered broker, exchange, and clearinghouse to solicit customers, process orders, authorize bids, and act as an intermediary. The complaint named Coinbase and Coinbase Global as defendants, but did not name founder and CEO Brian Armstrong or other executives.

“The Coinbase platform integrates three functions that are typically separated in traditional securities markets – brokers, exchanges and clearing houses. has never registered with the SEC as an entity and is circumventing the disclosure regimes Congress has established for the securities market.” (SEC)

On June 6, SEC Chairman Gensler said in a press release that these different functions are “confusing.”

“Coinbase’s allegations deprive investors of important protections, including rules to prevent fraud and market manipulation, proper disclosure, safeguards against conflicts of interest, and regular inspections by the SEC,” Gensler said.

Bills specific to crypto-assets

Meanwhile, Coinbase Chief Legal Officer Paul Grewal, who will testify before the House Agriculture Committee on Tuesday, called for a crypto-specific bill in a statement.

“In the absence of clear rules for the digital asset industry, the SEC’s reliance on an enforcement-only approach undermines America’s economic competitiveness and companies like Coinbase that have demonstrated a commitment to compliance. The solution is not litigation, but laws where fair rules are transparently formulated and applied equally, while we continue to do business as usual,” Grewal said in a statement.

Today we charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency and for failing to register the offer and sale of its crypto asset staking-as-a-service program.https: //t.co/XPG2gDkxtV pic.twitter.com/hCdVMw8B2v

— US Securities and Exchange Commission (@SECGov) June 6, 2023

The SEC has cited Coinbase’s Prime, Wallet, and staking products, as well as its publicly traded crypto assets, as areas where it violates federal securities laws.

Specifically, Solana (SOL), Cardano (ADA), Polygon (MATIC), Sandbox (SAND), Filecoin (FIL), Axy Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet・Identified securities such as computer (ICP), near (NEAR), voyager (VGX), dash (DASH), and nexo (NEXO).

Earlier this year, the SEC issued a Wells Notice that it could sue Coinbase, and Coinbase responded to the notice in April.

In its Friday complaint, the SEC said Coinbase violated exchange laws by failing to register four different counts, and also violated securities laws, citing the company’s continued violations as a “permanent suspension.” and demand the return of ill-gotten gains and civil penalties.

Unlike the Binance complaint, it does not say Coinbase mixed customer funds or allowed company executives to transfer such funds to other entities.

The cryptocurrency market and Coinbase stock (pre-market) have fallen on the news.

｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
| Image: Coinbase CEO Brian Armstrong (CoinDesk)
｜Original: SEC Sues Coinbase on Unregistered Securities Exchange Allegations