Brian Armstrong, CEO and Co-Founder, Coinbase, speaks during the Milken Institute Global Conference on May 2, 2022. in Beverly Hills, California.
Patrick T. Fallon | AFP | Getty Images
The Securities and Exchange Commission sued crypto exchange Coinbase in New York federal court on Tuesday morning, alleging that the company was acting as an unregistered broker and exchange and demanding that the company be “permanently restrained and enjoined” from continuing to do so.
Shares fell 15% in premarket trading Tuesday. Coinbase stock had already fallen 9% on Monday, after the SEC unveiled charges against rival crypto exchange Binance and its founder Changpeng Zhao.
Coinbase’s flagship prime brokerage, exchange and staking programs violate securities laws, the regulator alleged in its complaint. The company “has for years defied the regulatory structures and evaded the disclosure requirements” of U.S. securities law.
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,” said SEC chair Gary Gensler said in a statement.
Coinbase did not immediately respond to a request for comment.
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