The United States continues its crusade against cryptocurrency companies, which for years have taken advantage of legal loopholes to operate, sometimes even in direct violation of the rules. The Securities and Exchange Commission (SEC) has decided to take action and charge some of the largest firms in the industry. He The SEC sued Binance โ the world's largest cryptocurrency exchange โ on Tuesday and Wednesday filed charges against Coinbase, the crypto leader in the United States, who had already been fined by the authorities before. The US agency accused Coinbase of operating an unregistered securities platform and brokerage service.
Coinbase shares fell sharply in the stock market before the official market open, around 15%. Bitcoin was also trading lower again. Coinbase is the largest crypto asset trading platform in the United States and has served more than 108 million customers, representing billions of dollars in daily trading volume across hundreds of crypto assets, according to the SEC.
The SEC has for years allowed cryptocurrency platforms like FTX or Coinbase to trade in plain sight without taking any action. Now, the agency claims these companies were breaking the law, but one company doesn't reach 108 million customers on the sly. It is clear that after the FTX bankruptcy and the discovery of the gigantic fraud that its founder, Sam Bankman-friedand its partners had allegedly been compromising, regulators have raised the bar when it comes to scrutinizing the cryptocurrency sector.
According to the SEC's 101-page complaint, Coinbase, since at least 2019, has made billions of dollars by illegally facilitating the buying and selling of crypto asset securities. The SEC alleges that Coinbase weaves together the traditional services of an exchange, broker, and clearinghouse without registering any of those functions with the Commission, as required by law.
According to the regulator, Coinbase's failure to register deprived investors of important protections, including supervisory inspection, record-keeping requirements, and conflict-of-interest safeguards, among others.
Return the money
In this case, unlike Binance, the company is not charged with siphoning off billions of dollars, but with illegally earning it through commissions. The SEC asks the judge to prevent the platform from continuing to operate illegally, as well as those responsible. The SEC also proposes in its lawsuit that Coinbase be ordered to repay all profits made through its violations of securities laws, with interest for late payments, and that the company be fined for its violations.
โYou can't just ignore the rules because you don't like them or because you prefer different ones: the consequences for the investing public are too great,โ said Gurbir S. Grewal, Director of the SEC's Division of Enforcement. . โAs alleged in our complaint, Coinbase was fully aware of the applicability of federal securities laws to its trading activities, but deliberately refused to follow them. While Coinbase's calculated decisions may have earned it billions, they do so at the expense of investors by depriving them of the protections to which they are entitled. Today's action seeks to hold Coinbase accountable for its choices."
Before the SEC lawsuit, the cryptocurrency platform had already reached an agreement to pay a $50 million fine to the State of New York for significant failures in its regulatory compliance program, which violated state banking law and regulations on virtual currencies, money transmitters, transaction monitoring, and cybersecurity.
He the arrangement was made public in January by the New York State Department of Financial Services (DFS). According to the DFS, these flaws made the Coinbase platform vulnerable to serious criminal conduct, including, but not limited to, fraud, potential money laundering, suspicious activity involving child sexual abuse material, and potential narcotics trafficking. In addition to the sanction, Coinbase has agreed to invest an additional $50 million over the next two years to remedy the issues and improve its regulatory compliance program in accordance with a DFS-approved plan. Coinbase warned in its latest annual report that an investigation was underway.
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