The largest US cryptocurrency platform, oinbase">Coinbase, is being sued by the Securities and Exchange Commission (SEC), which claims that it is doing business illegally since it did not register as an exchange.
Following its case against Binance, the largest cryptocurrency exchange in the world, and its founder, Changpeng Zhao, the SEC filed a second complaint against a significant cryptocurrency exchange in only two days.
Both legal cases are a part of SEC Chairman Gary Gensler’s initiative to exert jurisdiction over cryptocurrency markets, which he described as a “wild West” of investment, and to shield investors while bolstering their faith in capital markets. According to Gensler, “The crypto markets are undermining that trust, and I would say this: It undermines our overall capital markets.”
The SEC’s guidelines, according to cryptocurrency companies like oinbase">Coinbase, are unclear, and the government is overstepping its bounds by claiming to have authority over its sector.
oinbase">Coinbase’s general counsel, Paul Grewal, stated in a statement that business will go on as usual and that there has been a “demonstrated commitment to compliance”.
Additionally, oinbase">Coinbase is being accused of breaking securities laws in relation to its staking incentives scheme by ten US states, led by California.
After falling as high as 20.9 percent earlier in the day, shares of oinbase">Coinbase Global Inc., the parent company of oinbase">Coinbase, were down $6.42, or 10.9 percent, at $52.29 in afternoon trading. Within a few hours of the SEC filing, oinbase">Coinbase users withdrew more than $57 million, according to data firm Nansen.
The SEC claimed in its lawsuit, which was filed in federal court in Manhattan, that oinbase">Coinbase has been profiting in the billions of dollars since at least 2019 by acting as a middleman in cryptocurrency transactions and dodging transparency laws intended to safeguard investors. Including tokens like Solana, Cardano, and Polygon, the SEC said that oinbase">Coinbase sold at least 13 digital assets that qualify as securities and should have been registered.
According to a recent count, oinbase">Coinbase, which was founded in 2012, serves more than 108 million users and had $130 billion in customer cash and cryptocurrency holdings as of the end of March. 75 percent of its $3.15 billion in net revenue came from transactions last year.
About 3.5 million people participate in the staking rewards program, where oinbase">Coinbase pools cryptocurrency assets and uses them to sustain activity on the blockchain network in exchange for “rewards” it offers consumers after taking a commission. This is also an illegal unregistered security, according to the SEC.
