The Securities and Exchange Commission (SEC) is now going after popular North American crypto exchange Coinbase in a court of law. As if attacking Binance (as we reported earlier) wasn’t enough, the financial agency is looking to add another large firm to its victims list.
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The SEC Sues Coinbase
Allegations against Coinbase suggest that the firm operated an illegal and unregistered exchange for the past several years (the company has been around since 2012). The move is clearly a continuation of the Wells notice that Coinbase received last April. The notice said that while Coinbase wasn’t being charged with anything yet, it could expect charges in the future.
This was something executives took issue with, as they claimed they met with representatives of the SEC multiple times over the span of nine years to ensure they were always in compliance with present financial rules. Gary Gensler – the head of the SEC – said in a statement:
We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions. Coinbase’s alleged failures deprive investors of critical protections including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC.
The agency feels Coinbase has been offering the same services as an exchange, broker, and clearing agency, and thus since the year 2019, it’s been out of compliance as it was required to formally register with the SEC and undergo the necessary protocols. The statement from Gensler continued with:
By collapsing these functions into a single platform and failing to register with the SEC as to any of the three functions, and not having qualified for any applicable exemptions from registration, Coinbase has for years defied the regulatory structures and evaded the disclosure requirements that Congress, and the SEC have constructed for the protection of the national securities markets and investors.
Gurbir S. Grewal – director of the SEC’s division of enforcement – said that companies like Coinbase are not above the law and are not exempt from following the rules. He said:
You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones. The consequences for the investing public are far too great. As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them.
We Didn’t Do Anything!
Naturally, the trading platform is firing back and said:
The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance. The solution is legislation that allows fair rules for the road to be developed transparently and applied equally.
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