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    SEC sues Coinbase for breaking US securities rules

    Security

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    The U.S. Securities and Exchange Commission (SEC) lawsuit New York-based cryptocurrency exchange Coinbase is being sued for providing unregistered securities.

    The SEC lawsuit alleges that Coinbase has never registered as a broker, national stock exchange, or clearing house, and has evaded securities market disclosure regimes. The SEC has several cryptocurrency exchanges offered by Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Axie Infinity (AXS) and Chiliz (CHZ). Some tokens qualify as securities: FLOW, Internet Computer (ICP), NEAR, Voyager Token (VGX), DASH, and NEXO.

    The lawsuit further alleges that Coinbase has been operating as an unregistered security broker since 2019, almost two years before its April 2021 initial public offering.

    The SEC claims that Coinbase’s staking program includes five stackable crypto assets and that the staking program will be investment contracts, or securities. Coinbase has already engaged in a staking war with the SEC, and despite Kraken previously settling with the SEC and curtailing its staking service in the US, it claims its staking product does not qualify as a security. Was.

    SEC Chairman Gary Gensler Discusses Latest Coinbase Lawsuit Said The cryptocurrency exchange allegedly stripped its customers of important protections against fraud and manipulation, and circumvented proper disclosure and conflict-of-interest safeguards. SEC Executive Director Gurbil Gurwal said: Said:

    “As alleged in our complaint, Coinbase was fully aware of the applicability of federal securities laws to its business activities, but has deliberately refused to comply with them.”

    Coinbase shares fell 15% pre-trade after the SEC announced the lawsuit on June 6.

    Coinbase stock price movement. Source: Google

    The SEC lawsuit against Coinbase comes just one day after securities regulators sued Binance for violating securities laws and inflowing customer funds. Binance has been indicted for 13 violations under various securities laws, but the allegations against Coinbase have puzzled many in the cryptocurrency industry, primarily because Coinbase is a publicly traded company.

    Binance CEO Changpeng Zhao has lashed out at the SEC in response to the Coinbase lawsuit.

    Coinbase Chief Legal Officer Paul Grewal told Cointelegraph that the SEC’s reliance on an enforcement-only approach with no clear rules for the digital asset industry is hurting the U.S. economic competitiveness. said and added:

    “The solution, not litigation, is legislation that transparently enacts fair rules for roads and allows them to be applied equally. In the meantime, we will continue to operate as usual.”

    many people in the cryptocurrency community questioned How Coinbase was allowed to go public in 2021 if it operated as an unregistered security broker. One member of CryptoTwitter, The Wolf, said that Binance could lose some headroom if the SEC sues Coinbase.