SEC Sues Coinbase Over Staking Programs
The Securities and Exchange Commission filed a lawsuit against cryptocurrency exchange Coinbase in federal court in New York on Tuesday morning, alleging that the business was acting as an unregistered broker and exchange and requesting that it be “permanently restrained and enjoined” from doing so in the future.
In early trade on Tuesday, shares plunged 13%. On Monday, Coinbase stock had already dropped 9% after the SEC announced charges against rival crypto exchange Binance and its founder, Changpeng Zhao.
“These trading platforms, which they call exchanges, are combining a number of functions,” SEC head Gary Gensler said Tuesday on CNBC. “We don’t see the New York Stock Exchange operating a hedge fund,” said Gensler.
The regulator said in its lawsuit that Coinbase’s flagship prime brokerage, exchange, and staking programmes violate securities rules. The business “has defied the regulatory structures and evaded the disclosure requirements” of US securities law for “years.”
“We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions,” Gensler said in a statement.
(With inputs from Shikha Singh)
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