As part of its efforts to prevent unregistered securities from being offered to consumers, the Securities and Exchange Commission has filed a lawsuit against cryptocurrency exchange Coinbase. The SEC has filed a complaint alleging Coinbase had no registration with the Securities and Exchange Commission as either a broker, a national securities exchange or a clearing agency, thus evading securities laws.
According to the SEC, several cryptocurrencies offered by crypto exchanges are qualifying for the protection of investors, such as salana, cardano, polygon, filecoin, sandbox, axie infinity, chiliz, flow, internet computer, near, voyager, dash and nexus.
Coinbase is further accused in the lawsuit of unlawfully conducting an unregistered securities brokerage business since 2019, about two years before it plans to take its initial public offering public in April 2021.
Apparently, the SEC alleges that Coinbase's stake program includes five cryptocurrencies, making the program an investment contract and, therefore, a security that should be regulated by the SEC.
As a result of Kraken's settlement with the SEC and its decision to cease providing staking services to US consumers, Coinbase has already filed a lawsuit with the SEC arguing that it does not qualify as a security since the company's staking products are not securities.
According to SEC Chairman Gary Gensler, talking about Coinbase's latest lawsuit, he said the crypto exchange allegedly failed to provide its customers with the safety nets that prevent fraud, manipulation, and conflicts of interest they are entitled to, and compromised these rights through improper disclosures and conflicts of interest safeguards.
After the SEC filed complaints against Coinbase, Gensler said that the whole cryptocurrency industry was built on the idea of breaking the rules to drive its business model. There is no need for more digital currencies in the world, as one top US regulator said in a damning interview with CNBC, referring to cryptocurrencies.
Interesting situation. We have no doubt that there will be more and more things like this in the future, considering that many do illegal things.
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