Home » SEC also sues Coinbase, stock plunges (-15%)

SEC also sues Coinbase, stock plunges (-15%)

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SEC also sues Coinbase, stock plunges (-15%)

After suing the world‘s largest crypto exchange, Binance, the Securities and Exchange Commission is also calling the court Coinbase. The SEC, the Consob USA, has sued in the federal court of New York, the crypto exchange led by Brian Armstrongclaiming that the company was acting as a broker and unregistered crypto exchange and further requested that the company be “permanently blocked” from conducting these activities.

The SEC allegations

Coinbase’s flagship programs, prime brokerage, exchange e staking, violate securities laws, according to the SEC complaint. The company “has challenged regulatory structures and circumvented disclosure requirements” of US securities law for years.

The SEC said that at least 13 cryptocurrencies available for Coinbase customers they were considered “crypto asset securities” or financial products, and for this Coinbase yes should have registered as an exchange. This is the token of Solana (SOL), the token of Cardano and the token Filecoin at Protocol Labs.

It is worth specifying that an asset is considered a security if it fits the following descriptions: It is an investment in a joint venture, with a reasonable expectation of returns, through the work of others.

“We argue that Coinbase, despite being subject to securities laws, has mixed and bid illegally functions as trading, brokerage and clearing services“, the SEC Chairman said in a statement, Gary Gensler. “These trading platforms, which also refer to themselves as exchanges, are combining a number of functions,” Gensler told CNBC on Tuesday. “We don’t see the New York Stock Exchange running a hedge fund,” Gensler continued.

Additionally, Coinbase’s institutional service, Prime, its retail exchange product and custody service, Wallet, all offered one or more secure cryptocurrencies, the SEC said in the complaint.

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Coinbase’s staking program was also identified as an investment contract and an unregistered security – the SEC previously took similar action to force the shutdown of cryptocurrency exchange Kraken’s staking service.

In the meantime, remember that staking is a part of the process that some cryptocurrencies use to verify transactions and consists in blocking assets (tokens) to obtain interest or rewards.

The SEC described the staking program as a way for “investors to earn financial returns through Coinbase’s managerial efforts.” The SEC says the five “staking crypto assets” are considered securities under its interpretation of the law, an assessment that will no doubt be challenged by Coinbase.

Coinbase crolla a Wall Street

The title collapses by 16% a 48 dollars per share, shortly after the opening of trading on Wall Street. The stock had already lost about 9% in yesterday’s session following SEC allegations against rival cryptocurrency exchange Binance and its founder Changpeng Zhao.

Bitcoin on the other hand recovers ground after yesterday’s sell-off, currently at $25,992 (+1,2%).

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