Coinbase Accused Of US Rule Violations
Coinbase, the biggest cryptocurrency exchange in America, has been sued by the US Securities and Exchange Commission. The SEC claims that Coinbase operated as an unregistered broker, exchange, and clearing agency. This goes against US securities regulations.
The regulator is suing Binance, the biggest cryptocurrency exchange, just like they did with this new lawsuit.
The SEC accused Coinbase of being unregistered since 2019. They also claimed that the platform acted as an unregistered broker, exchange, and clearing agency.
Coinbase has been accused of not following regulations. It has not registered with the SEC. It has combined three different functions into one platform. This means it has evaded disclosure requirements. The SEC and Congress created these regulations. These regulations are meant to protect the national securities market and investors.
The main guy for law at Coinbase, Paul Grewal, thinks the SEC is hurting the US economy. He says they don't have clear rules for digital assets, and only focus on punishing people, even if companies like Coinbase follow the rules.
We need fair rules for the road. It's better to make them transparently and apply them equally with legislation. Litigation is not the answer. While waiting for legislation, we'll continue our business as usual.
The regulator thinks Coinbase trades crypto tokens that are securities. US law says that trading securities is strictly regulated. This is the main argument for the regulator's case.
The SEC has criticized Coinbase for not following securities regulations. One of their programs called "staking-as-a-service" is being questioned. This program lets customers make money from certain blockchains and Coinbase's work. The SEC thinks that this program is breaking the rules and is a security on its own.
The Howey test decides if something is a regulated security in America. It was made in a court case from 1946. The definition says a regulated security is when someone invests in a project and expects profits only from the promoter or a third party.
The SEC complained that Coinbase allowed trading of crypto assets that are considered investment contracts under federal securities laws. Coinbase only pretended to follow the law. This has been a problem for years.
The SEC accused Binance on Monday. They said Binance mixed billions of dollars. Binance also secretly sent the money to another company. They did this while breaking their own rules. Binance let US investors trade on their website, even though it was not regulated.
The SEC and Coinbase used to work closely. Coinbase wanted to work with regulators instead of acting against them like others. But now, their relationship is not good. In April, Coinbase took the SEC to court to make them legalise crypto securities.
