Coinbase is on course for a legal battle with the United States Securities and Exchange Commission (SEC). In an official tweet today, the SEC announced that it has filed a case against Coinbase for providing unregistered securities. According to the tweet, the regulatpor indicted the New York-based cryptocurrency exchange for failing to register as a broker. The regulator stated that since 2019, Coinbase has been operating in the country as an illegal security broker.
Also, the regulators established that Coinbase didn’t have a proper license to operate as a national securities exchange. The SEC went on to state that Coinbase failed to fulfill some regulatory obligations owing to its lack of proper registration. Some of these obligations include neglecting disclosure procedures for the securities markets. Similarly, the SEC spurred up another controversy by labeling tokens like SOL, ADA, FIL, MATIC, SAND, NEAR, DASH, and many others as securities.
Meanwhile, the Chairman of the United States Securities and Exchange Commission, Gary Gensler illuminated the lawsuit. He disclosed that the failure of Coinbase to register duly is to the detriment of its users. Gary Gensler established that a lack of proper registration will expose Coinbase users to fraud, and manipulation. Additionally, the SEC boss added that users of the crypto exchange were denied proper disclosure and protection against conflicts of interest.
Previous Legal tussle between Coinbase and SEC
Likewise, the SEC stated that Coinbase’s staking initiative is a security. The regulator explained that the service has five (5) stackable crypto assets which qualify the staking initiative as an investment contract. Due to that, the SEC alleged that the service is a security.
However, Coinbase has been at loggerheads with the SEC about its staking program. Before the lawsuit emanated, Coinbase and the SEC disagreed on whether the cryptocurrency exchange’s staking program is a security. Now, the lawsuit has made the official position of the SEC known.
Pointers about this lawsuit have been surfacing since March 2023. Then, the regulator issued a Wells Notice against Coinbase. The notice triggered a response from Coinbase which argued that the SEC failed to make proper findings before filing the notice. Consequently, the exchange argued that the notice failed to outline how it allegedly violated the Securities Law in the United States.
According to a Binbits report, Coinbase faulted the lackluster attitude of the regulator towards establishing a good relationship with the crypto exchange. The firm recalled how it submitted proposals to register duly in the country. However, the cryptocurrency exchange revealed that the SEC failed to consider the proposal. As it stands, cryptocurrency enthusiasts are awaiting Coinbase’s response to the allegations.