The U.S. Securities and Exchange Commission has always served as a watchdog on the crypto industry. It ensures investor protection, legal certainty, and market stability within the crypto industry. They do this so that the use of crypto follows laid-down regulations and is not contrary to the interests of investors.
Following its watchdog function, the U.S. SEC laid charges against one of the biggest crypto providers, Coinbase, earlier this month. The charges were brought on the ground that Coinbase has operated an unregistered securities exchange since at least 2019. This suit came only one day after the U.S. SEC filed several charges against Binance.
We have made it easier to know what SEC’s claims against Coinbase entail by highlighting all you need to know. Follow through!
What are the charges about?
Coinbase has operated in the U.S. as a crypto trading platform since 2012. It is the largest exchange in the U.S. in terms of volume and has been offering its services with the idea that anyone should be able to easily and securely send or receive Bitcoin.
However, Coinbase is facing serious charges by the financial watchdog, the Securities and Exchange Commission, for failing to give investors legal protection while acting as a broker. The SEC alleges that Coinbase made billions of dollars unlawfully and put customers at risk by providing a marketplace for securities and acting as an intermediary for customer transactions.
In essence, the SEC states that Coinbase failed to follow stipulated regulations and requirements that Congress and the SEC had construed to protect national securities markets and investors. The complaint seeks injunctive relief, penalties, and other equitable relief.
On the other, Coinbase responded to the charges made by the SEC with the view that the lack of clear rules for digital assets is hurting America’s economic competitiveness and compliant-dedicated companies like Coinbase. They believe fair rules should be created to ensure equal application and transparency.
Coinbase had always believed that cryptocurrencies were not securities and therefore did not need to be registered, contrary to the SEC’s position of them as securities. The back and forth resulted in the SEC warning Coinbase in March that it could face charges bordering on securities.
SEC has now made good on its earlier warning by filing these charges against Coinbase.
What next?
Following the news of Coinbase charges, its shares dropped by about 15%. There has yet to be any news about progress on the complaint filed by SEC. However, Coinbase continues to operate as usual and maintains that the solution is legislation applied equally, not litigation.
Thus, staying updated about changes and if they could affect your crypto investments is crucial.
