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On Tuesday, the U.S. Securities and Exchange Commission filed a lawsuit against Coinbase alleging that the crypto exchange was operating as a broker, national securities exchange, and clearing agency without registering with the SEC.
The SEC further alleges that different crypto assets offered on Coinbase are unregistered securities, including popular cryptocurrencies such as Solana and the native tokens of Cardano and Polygon.
The lawsuit comes a day after the SEC filed suit against Coinbase rival Binance, and less than three months after Coinbase disclosed it had received a Wells Notice from the SEC—a document that the agency uses to inform firms that they are facing a legal investigation.
“Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC,” said SEC Chair Gary Gensler in a statement.
The lawsuit will send shockwaves through the crypto industry, with Coinbase long presenting itself as a legally compliant player in the volatile sector.
The lawsuit was filed in the U.S. District Court of the Southern District of New York.
“You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement in a statement.
A Coinbase spokesperson did not immediately respond to a request for comment.
This is a developing story. Check back for updates.
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