The United States is on a crypto crackdown frenzy. Just one day after the United States Securities and Exchange Commission (SEC) sued Binance for allegedly deceiving investors, mishandling consumer funds and artificially boosting trading volume among other charges, the watchdog has charged Coinbase with operating illegally via failure to properly register as a securities exchange, broker and clearing agency.

The lawsuit brought forward alleges that Coinbase has operated as an unregistered security broker for more than 3 years, claiming that the staking program of the United States’ largest cryptocurrency exchange included five stackable crypto assets, which recognizes the staking program as an investment contract and hence, a security.

Multiple tokens offered by the exchange, including Solana, Cardano, Polygon and Filecoin qualify as securities, and the SEC has updated its list of the cryptocurrencies recognized as securities to become 67 in total. SEC Division of Enforcement director Gurbir Grewal stated:

“As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them.”

With the circulation of the news, the Coinbase stock (NASDAQ: COIN) took a beating, dropping nearly 20% to price at $47 apiece, but throughout the day, the stock has impressively recovered nearly half of its lost value.

Sources:

https://www.bbc.com/news/business-65824886

https://cointelegraph.com/news/sec-sues-coinbase-crypto-exchange

https://cointelegraph.com/news/coinbase-stock-plunges-20-on-sec-lawsuit

https://www.reuters.com/legal/us-sec-sues-coinbase-over-failure-register-2023-06-06/

https://www.sec.gov/news/press-release/2023-102