The US Securities and Exchange Commission (SEC) has announced a similar action against Binance’s competitor, Coinbase, hours after suing Binance and its founder, Changpeng Zhao.
SEC filed a lawsuit against Coinbase
It is now possible to see the complaint, which was made against Coinbase and Coinbase Global.
Since 2019, Coinbase has allegedly operated in the US without being registered as a broker, national securities exchange, or clearing agency, according to the SEC’s petition.
The regulator further said that the “five stakeable crypto assets” in Coinbase’s Staking Programme were Ethereum (ETH), Cosmos (ATOM), Solana (SOL), and Tezos (XTZ), classifying the program as an investment contract and security. Tokens including SOL, DASH, FLOW, ADA, AXS, FIL, SAND, MATIC, CHZ, ICP, NEAR, VGX, and NEXO were all included as securities in the case.
The pre-market price of Coinbase declined by 16% as a result of the SEC action. The SEC case has drawn criticism from the majority of the cryptocurrency community, which has questioned how Coinbase could have continued to operate as an unregistered exchange after the agency gave the platform the all-ahead to go public in April 2021.
Gary Gensler, the chairman of the SEC, commented on the lawsuit: “Coinbase’s alleged failures rob investors of essential security measures, including rulebooks that prohibit theft and deceit, accurate disclosure, measures against conflicts of interest, and regular SEC inspection.”
A day prior, the SEC filed a complaint against Binance and CEO Changpeng Zhao, alleging that they violated securities laws and that the cryptocurrency exchange had mixed up consumers’ money. In response, Binance refuted the claims and said that the SEC’s activities were more of an effort to demonstrate judicial control over other regulatory organizations than a concern for investor protection.
CEO of Coinbase, Brian Armstrong, criticized the SEC’s move
Brian Armstrong, the CEO of Coinbase, criticized the SEC for choosing to sue the exchange.
The SEC has filed charges against Coinbase, which are based on the allegation that the company has been listing securities without the federal agency’s permission. The examination of the digital asset platform has increased as a result of fresh actions from Alabama and New Jersey.
On Twitter, Armstrong reacted to the SEC’s allegations, disputing the notion that the firm was operating without regulation by pointing out that the SEC had evaluated and approved Coinbase’s application to become a publicly listed corporation in 2021.
Armstrong stated: “The SEC has adopted a regulation by enforcement approach that is hurting America rather than publishing a clear rule book.”
Armstrong brought up Coinbase’s efforts to get registered with the SEC, showing how the regulatory agency and the Commodity Futures Trading Commission (CFTC) disagree on the definition of what exactly qualifies as a cryptocurrency security or commodity.
Coinbase and other firms to discuss with US authorities
Coinbase is scheduled to meet with lawmakers as Gary Gensler’s Securities and Exchange Commission (SEC) continues its crackdown, with Changpeng Zhao’s Binance being the most recent exchange to come under the regulator’s scrutiny.
Paul Grewal, the chief legal officer of Coinbase, will be appearing before the committee on agriculture on June 7, the exchange announced.
Grewal will discuss Coinbase’s position on the recently proposed Digital Asset Market Structure draft Bill with officials in addition to discussing the necessity of agreeable, unambiguous regulations in the nation. The draft bill was floated by G.T. Thompson, chairman of the House Agriculture Committee, and Patrick McHenry, chair of the Financial Services Committee.
The SEC has not yet developed clearer regulations for the US digital asset market, leaving market players perplexed. This is despite complaints from cryptocurrency market participants and even certain progressive regulators, such as Heister Peirce.