SEC Sues Coinbase For “Securities Law Violations”
• June 6, 2023 3:04 pm • CommentsIt looks like the SEC is once again going forward with its anti-crypto agenda and has now announced that it will sue Coinbase for multiple securities law violations.
Many investors had speculated that this would happen after the SEC had given Coinbase a Wells notice which is usually the final step before the SEC takes legal action.
The SEC is saying that Coinbase had never registered as a broker or national securities exchange despite dealing with “securities”.
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Of course, the crypto market had responded negatively to this news as this is a major blocker to the growth of the digital asset industry within the US.
It is unclear how long this lawsuit could drag on, but history has shown that lawsuits involving the SEC and crypto could take some time.
The SEC just went after @coinbase
The SEC also approved the Coinbase IPO in 2021
This is contradictory
This is predatory
This is communism https://t.co/k3KpnIHCH0— Wendy O (@CryptoWendyO) June 6, 2023
Watcher.guru reports:
The SEC’s complaint has been filed in U.S. District Court for the Southern District of New York. Specifically, it alleges that Coinbase and CGI violated certain “registration provisions” of the Securities Exchange Act of 1934.
Additionally, it also claimed that Coinbase violated the securities offering registration provisions of the Securities Act of 1933. In the lawsuit, the SEC specifically deemed SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO to be securities.
The agency also contended that Coinbase “never registered” its staking-as-a-service program as required by the securities laws. All this deprives investors of “critical protections,” according to SEC Chair Gary Gensler. Commenting on similar lines, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement said that Coinbase’s “calculated decisions” might have allowed it to earn billions.
However, this was done at the expense of investors. According to Grewal, today’s action seeks to hold Coinbase “accountable for its choices.” He added,
“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.”
It is not quite clear why the SEC has decided to sue Coinbase right now given that Coinbase has already been in business for many years.
Additionally, Coinbase is also a public company that is registered on the NASDAQ so it has cleared a lot of regulation already.
Many believe that there is a broader anti-crypto agenda that is being pursued in 2023 which is why the SEC is taking action right now.
As a response to the news, the price of Coinbase stock took a hit and had decreased by around 13% which is a significant amount to lose in one day.
More upcoming news indicates that it is not only Coinbase that the SEC is now targeting, but many other crypto firms as well.
SEC: our mission is to protect investors
Also SEC: reviews Coinbase's business model, approves Coinbase to go public, allows Coinbase to sell stock to retail investors
Then SEC: alleges Coinbase's business model is illegal and tanks stock by 20% causing losses to investors
???
— Jake Chervinsky (@jchervinsky) June 6, 2023
CNBC concludes:
The SEC has alleged that at least 13 crypto assets available to Coinbase customers were considered “crypto asset securities” by the regulator. Those assets include Solana’s SOL
token, Cardano’s
token and Protocol Labs’ Filecoin token.“We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions,” Gensler said in a statement.
“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,” Coinbase chief legal officer Paul Grewal told CNBC in a statement.
“The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual.”
NEWS: Coinbase is allowed to go public, then the SEC sues. Hypocrisy or not?https://t.co/bliuSNqV0I
— Blockworks (@Blockworks_) June 6, 2023
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