SEC Sues Coinbase, Alleging It Acted as an Unregistered Broker

In a shocking development, the SEC filed suit against crypto exchange Coinbase on Tuesday, alleging it acted as an unregistered broker and exchange.

On Tuesday, the US Securities and Exchange Commission (SEC), in its relentless pursuit of the crypto industry, sued crypto exchange Coinbase in a New York federal court. The agency alleges the exchange acted as an unregistered broker and exchange and is demanding that the firm be “permanently restrained and enjoined” from further doing so.

The complaint comes less than a day after the agency sued Binance and its CEO, Changpeng Zhao.

SEC: Coinbase Is an Unregistered Exchange, Broker, and Clearing Agency

In a press release, the securities regulator said Coinbase acted as an unregistered securities exchange, broker, and clearing agency and charged it for “the unregistered offer and sale of securities in connection with its staking-as-a-service program.”

The SEC details:

Since 2019, Coinbase has been engaging in an unregistered securities offering through its staking-as-a-service program, which allows customers to earn profits from the “proof of stake” mechanisms of certain blockchains and Coinbase’s efforts.

Through its unregistered services, the agency said Coinbase allegedly:

Provides a marketplace and brings together the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interact.

Further, it states that Coinbase:

Engages in the business of effecting securities transactions for the accounts of Coinbase customers.

Finally, the SEC alleges that Coinbase:

Provides facilities for comparison of data respecting the terms of settlement of crypto asset securities transactions, serves as an intermediary in settling transactions in crypto asset securities by Coinbase customers, and acts as a securities depository.

The regulator furthe

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Author: Jana Serfontein

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