Crypto exchange Coinbase just got slammed by the SEC: 'You simply can’t ignore the rules because you don’t like them'
The crypto-trading platform Coinbase is being charged by the SEC in the US for acting as an unregistered securities exchange and broker, which essentially amounts to ruling against a big part of the company's whole schtick.
The SEC accuses the crypto platform of failing to register as a securities exchange, and thus unable to offer significant protections, including inspection by the SEC, recordkeeping, and safeguards. Also that it's been unlawfully running its staking-as-a-service program to allow people to earn profits from proof-of-stake algorithms common to a couple of major cryptocurrencies.
In the 101-page complaint, the SEC alleges that Coinbase, «made calculated business decisions to make crypto assets available for trading in order to increase its own revenues, which are primarily based on trading fees from customers, even where those assets, as offered and sold, had the characteristics of securities.»
Whether cryptocurrencies fall under the securities umbrella, meaning they're more akin to shares of a company in some considerations, has been heavily debated over the years. But recently there has been an understanding by the SEC that when a virtual currency is offered as an «investment contract» it falls under the securities category and under the SEC's watchful eye.
A handful of cryptocurrencies are named in the complaint, including AXS tokens, which are a currency in a blockchain game called Axie Infinity, and has digital pets called «Axies». It would seem the SEC has a particular interest in this collection of hairballs.
«Since at least 2016, Coinbase has understood that the Supreme Court’s decision in SEC v. W.J. Howey Co., 328 U.S. 293 (1946) and its progeny set forth the relevant test for determining
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