The Securities and Exchange Commission on Monday sued Coinbase, the nation’s largest crypto platform, accusing the company of failing to register with the federal agency despite acting as a broker, exchange 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 SEC said in a complaint filed in federal court on Tuesday.
Regulators accused Coinbase of trading at least 13 crypto assets that are securities, requiring the company to register with the SEC. They also accused Coinbase of operating as an unregistered broker through its Coinbase Prime and Coinbase Wallet services and of offering and selling securities without registering its offers and sales through its staking program.
“Coinbase has carried out these functions despite the fact that the crypto assets it has made available for trading on the Coinbase Platform, Prime, and Wallet have included crypto asset securities, thus bringing Coinbase’s operations squarely within the purview of the securities laws,” the SEC said in its complaint.
Coinbase did not immediately respond to the allegations.
In a statement posted on social media, SEC Chair Gary Gensler said Coinbase’s alleged conduct deprived investors of protections aimed at preventing fraud and manipulation, conflicts of interest and more.
In the last two years, Gensler has aimed to shift the SEC’s enforcement efforts in crypto away from the issuers of tokens and to the platforms where those tokens are traded, compromising a much smaller group, according to The Wall Street Journal. More than 108 million customers have used Coinbase, which had more than 16,000 crypto assets available for trade by the end of last year, according to regulators.
The SEC’s suit came one day after the agency took regulatory action against the world’s largest crypto platform, Binance. Regulators charged the company and its founder with several securities law violations, including operating unregistered exchanges, broker-dealers and clearing agencies.