June 6th 23′ (VOICE) – The US Securities and Exchange Commission (SEC) has filed a lawsuit against Coinbase, the largest cryptocurrency exchange in the United States, accusing it of operating illegally due to its failure to register with the regulatory agency. This comes just a day after the SEC filed a similar case against Binance, the world’s largest cryptocurrency exchange, and its founder Changpeng Zhao.
SEC Chair Gary Gensler has been actively asserting jurisdiction over the crypto markets and aiming to protect investors and enhance trust in capital markets. He has referred to the crypto industry as a “Wild West” of investing that undermines overall capital markets.
Crypto companies, including Coinbase, have argued that SEC rules are unclear and that the regulator is overstepping its boundaries by asserting oversight over their industry. Coinbase’s general counsel, Paul Grewal, stated that the company will continue to operate as usual and remains committed to compliance.
In addition to the SEC lawsuit, Coinbase is facing legal action from ten US states, led by California, for alleged securities law violations.
Following the news of the lawsuit, Coinbase’s parent company, Coinbase Global Inc, experienced a decline in its shares, dropping by 13.9% in late morning trading.
The SEC’s complaint alleges that Coinbase has evaded disclosure requirements meant to protect investors and has traded at least 13 crypto assets that should have been registered as securities. Coinbase, founded in 2012, serves millions of customers and generated a significant portion of its revenue through crypto transactions.
The lawsuit seeks civil fines, the recovery of ill-gotten gains, and injunctive relief. The SEC had previously warned Coinbase in March about potential charges, stating that the company was fully aware of being subject to federal securities laws but chose to ignore them.
The SEC’s actions against Coinbase and Binance have prompted the crypto industry to prioritize compliance, reassess product offerings, and explore international expansion. The legal battle between regulators and crypto exchanges is likely to have a significant impact on the future regulation and operation of the cryptocurrency market.