Coinbase is facing legal action. Yes, the SEC and a group of state security regulators attack the platform. The allegations are serious: Coinbase allegedly illegally offered unregistered securities, violating securities laws.
New charges against Coinbase
While the accusations against Binance are still raging, the U.S. authorities are stepping up their regulatory crackdown, this time on Coinbase, the largest cryptocurrency exchange platform in the United States.
Tuesday, June 6, a Show Cause order has been issued against Coinbase by the Alabama Securities and Exchange Commission. This decision sent shockwaves through the cryptocurrency ecosystem.
If this complaint is to be believed, Coinbase allegedly violated securities law by offering staking rewards and selling securities without official authorization.
Specifically, Coinbase is accused of offering unregistered securities such as SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO.
L’Alabama Securities Commission points out that Coinbase shares the profits from these accounts with investors. However, it warns that accounts in the staking rewards program of Coinbase are not insured by FDIC or the SIPC.
As a result, there is no protection against loss for investors, including the more than 33,000 accounts held by Alabama residents.
Coinbase takes a share of these (staking) profits before sharing them with investors. The ASC (Alabama Securities Commission) action does not prohibit Coinbase from offering staking as a service, as long as it complies with Alabama law.
Excerpt from the order
The group of state safety regulators has given Coinbase 28 days to respond to this order. They also called on investors to check the registration status of staking rewards programs before investing.
SEC also goes after Coinbase…
As if that weren’t enough, the SEC also makes other accusations against the trading platform.
The SEC indicated that Coinbase has never been registered as a broker, national securities exchange or clearing agency.
According to SEC Chairman, Gary Gensler, Coinbase allegedly deprives customers of essential protections to prevent fraud and manipulation in the securities markets.
One reason could explain the multiplication of accusations against Coinbase: its willingness to defy the SEC in court. Although the regulator has recently been asked by the courts to reject the platform’s request the case remains pending. It remains to be seen how these regulatory proceedings might affect Coinbase as well as the entire cryptocurrency landscape in the days ahead.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
