The United States Securities and Exchange Commission (SEC) has initiated legal action against Coinbase, the largest cryptocurrency exchange in the United States which is headquartered in New York.
Coinbase Dominates the United States with Over 76% Market Share, Says Latest @coingecko Report
The rest of the US market share is as follows:
* Binance US – 8.3%
* https://t.co/Ti3Lx1VXP1 – 6%
* Kraken – 5.4%
* Gemini – 4.1%Approximately 3 out of every 4 American crypto… pic.twitter.com/Adad3fAR9E
— BitKE (@BitcoinKE) April 20, 2023
The lawsuit alleges that Coinbase provided unregistered securities to its customers which is in violation of the securities regulations enforced by the SEC.
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
— U.S. Securities and Exchange Commission (@SECGov) June 6, 2023
According to the lawsuit, Coinbase is accused of failing to register as a broker, national securities exchange, or clearing agency. This alleged failure to register is seen as an attempt to avoid compliance with the disclosure requirements associated with securities markets. The lawsuit suggests that Coinbase has evaded the regulatory framework applicable to securities markets.
According to the regulator, several tokens offered by the crypto exchange qualify as securities including:
- Solana
- Cardano
- Polygon
- Filecoin
- Axie Infinity
- The Sandbox
- Chiliz
- Flow
- Internet Computer
- Near
- Voyager Token
- Dash
- Nexo
The lawsuit filed against Coinbase also claims that the company has been functioning as an unregistered security broker starting from 2019, which is approximately two years prior to its initial public offering (IPO) in April 2021.
According to the SEC’s claims, Coinbase’s staking program incorporates five crypto assets that can be staked. The SEC asserts that this staking program qualifies as an investment contract, and consequently, falls under the category of a security.
“As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them,” said Gurbir Grewal, director of the SEC’s Division of Enforcement.
The SEC’s lawsuit against Coinbase comes just a day after the securities regulator sued Binance, which along with its CEO, Changpeng Zhao, is facing 13 charges. These charges include allegations of commingling customers’ funds and attempting to circumvent U.S. securities laws through the use of ‘sham controls’ to determine business relationships with the company.
The Binance lawsuit also classified cryptocurrencies like Solana, Polygon, Cardano, and others listed on the exchange as securities.
_______________________________________
