SEC Sues Coinbase, Accuses Crypto Platform of Breaking Market Rules
“Coinbase has elevated its interest in increasing its profits over investors’ interests, and over compliance with the law and the regulatory framework that governs the securities markets and was created to protect investors and the U.S. capital markets,” the filing said.
Coinbase went public in April 2021, an event seen as a milestone in crypto’s march into the mainstream. The company handled $830 billion worth of trades last year, with nearly nine million users making at least one trade per month.
The S.E.C. said Coinbase had made billions easing the sale of crypto assets but deprived investors of significant protections. Its complaint, filed in federal court in Manhattan, claims that the company operated as an unregistered exchange even though it told investors in going public that regulators might deem some of the products traded on its platform to be securities.
Coinbase has argued that its business model got tacit approval from the S.E.C. when the agency approved its initial public offering. The company has said it is willing to work with the S.E.C. but does not agree with its position that all digital assets offered on its trading platform must be registered securities, which require more strict oversight.
The action is consistent with the S.E.C.’s long-held view that most crypto products are no different from stocks, bonds and other securities. That means the firms that operate as exchanges and provide a platform for trading and selling crypto products must be registered like any exchange or brokerage that facilitates stock or bond trading.
Source: The New York Times
