Coinbase Accused of Unregistered Brokerage and Securities Violations – Following its lawsuit against Binance, the U.S. Securities and Exchange Commission (SEC) has now taken legal action against Coinbase, a San Francisco-based exchange. The SEC alleges that Coinbase has violated multiple securities regulations and has been operating as an unregistered broker since 2019.
The SEC claims that Coinbase, a digital currency platform, has acted as an unregistered broker and violated various securities laws. Although Coinbase has assessed certain cryptocurrencies for compliance with the Howey test, the SEC argues that the company has listed several cryptocurrencies that do not pass the test or can be classified as investment contracts.
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In terms of categorizing individual assets as securities, the regulatory body asserts that coins such as ICP, AXS, CHZ, FLOW, DASH, VGX, FIL, NEXO, NEAR, ADA, SAND, SOL, and MATIC fulfill the criteria of being investment contracts. “We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions,” stated SEC chair Gary Gensler.
He added: “Furthermore, as we allege, Coinbase failed to register its staking-as-a-service program as required by securities laws; again depriving investors of crucial disclosure and other protections.” The SEC’s concern regarding Coinbase’s staking platform revolves around the allegation that the company failed to submit adequate documentation to regulators to offer such services.
This omission led to Coinbase being accused of withholding crucial information about the program from investors and violating the registration requirements outlined in the Securities Act of 1933. Consequently, the news has had a negative impact on the overall cryptocurrency markets, with a 4.4% decrease in values observed over the past 24 hours, resulting in a current global market cap of approximately $1.13 trillion.
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Since this event unfolded, Coinbase’s stock has experienced a significant decline of nearly 16% and dropped to $58.71 per share during pre-market trading sessions. However, it’s worth noting that Coinbase’s shares have seen a positive trend over the past month, with a 1.04% increase, and an impressive growth of 38.42% over the past six months.
