SEC to Coinbase: You're Making Billions But Failing to Protect Investors
The US Securities and Exchange Commission is going after Coinbase for allegedly facilitating cryptocurrency transactions from millions of consumers while skirting federal oversight.
The SEC on Tuesday sued Coinbase(Opens in a new window) over claims the cryptocurrency trading platform has been operating as a “unregistered national securities exchange, broker, and clearing agency.”
“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,” the US regulator says in the court fiiling(Opens in a new window).
According to the SEC, Coinbase should have registered itself as a broker, national securities exchange, and clearing agency since it engages in all three activities through its cryptocurrency businesses. But the company has neglected to do so, denying investors financial protections, “including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest, among others,’ the SEC says.
“While Coinbase’s calculated decisions may have allowed it to earn billions, it’s done so at the expense of investors by depriving them of the protections to which they are entitled,” says SEC Director of Division of Enforcement Gurbir S. Grewal.
The regulator is now demanding that a federal court force Coinbase to register under US securities laws, and give up the “ill-gotten gains” made from the various violations. However, Coinbase say it’s done nothing wrong, and argues that the rules for crypto-trading are murky.
“The SEC's reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s
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