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THE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & LifestyleTHE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & Lifestyle

Cryptocurrencies

Cryptocurrencies

The SEC sues Coinbase one day after Binance.

A representation of the cryptocurrency is seen in front of Coinbase logo in this illustration taken,... A representation of the cryptocurrency is seen in front of Coinbase logo in this illustration taken, March 4, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
A representation of the cryptocurrency is seen in front of Coinbase logo in this illustration taken,... A representation of the cryptocurrency is seen in front of Coinbase logo in this illustration taken, March 4, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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Coinbase (COIN.O), the largest U.S. cryptocurrency exchange, was sued by the SEC on Tuesday for operating illegally without first registering.

The SEC’s complaint against Binance, the world’s largest cryptocurrency exchange, and founder Changpeng Zhao is it’s second in two days.

Both legal cases are part of SEC Chair Gary Gensler’s effort to exert control over crypto markets, which he again called a “Wild West” of investment on Tuesday, and protect investors and build capital market trust.
“The cryptomarkets are undermining that trust, and I would say this: it undermines our overall capital markets,” Gensler told CNBC on Wednesday.

Coinbase’s general counsel, Paul Grewal, stated the company will continue operations.

“The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance,” he added.

After plunging as much as 20.9%, Coinbase Global Inc. shares fell $9.37, or 16.2%, to $49.33.

In a Manhattan federal court complaint, the SEC said Coinbase had profited billions of dollars as a crypto intermediary since at least 2019 by dodging investor protection disclosures.
The SEC said Coinbase traded at least 13 equities without registration, including Solana, Cardano, and Polygon.

Coinbase, founded in 2012, had over 108 million customers and concluded March with $130 billion in customer crypto assets and funds. Transactions contributed 75% of its $3.15 billion net revenue last year.

Tuesday’s complaint highlighted Coinbase’s Prime, Wallet, and Earn services.

Coinbase pools crypto assets and facilitates blockchain activity in exchange for “rewards” for consumers after taking a commission in the staking program.

According to the SEC, Coinbase was “fully aware” of federal securities rules but ignored them.

“You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones,” SEC Enforcement Chief Gurbir Grewal stated.

Tuesday’s action demands civil fines, restitution, and injunctions. The SEC cautioned Coinbase of securities crimes in March.

Coinbase and Gensler clashed in 2021 after the SEC threatened to sue if Coinbase let users earn interest by lending digital assets. The corporation abandoned it.

The SEC accused Binance of exaggerating trade volumes, diverting user funds, inappropriately commingling assets, failing to keep rich U.S. consumers off its platform, and misrepresenting its controls.

Binance vowed to fight the action, calling it the SEC’s “misguided and conscious refusal” to provide crypto sector clarity and advice.

SEC v Coinbase Inc et al., U.S. District Court, Southern District of New York, 23-04738.


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