Coinbase, don't feel left out. SEC has a lawsuit for you, too
It's been a bad week for the cryptocurrency world. Yesterday the US Securities and Exchange Commission sued the world's largest crypto exchange, Binance, alleging 13 counts of fraud and other financial crimes. Today, the watchdog is coming down on the second largest exchange, Coinbase, for similar reasons.
"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," SEC chairman Gary Gensler said. Coinbase also offered cryptocurrency staking-as-a-service, in which it pools the cryptocurrency of multiple investors to validate proof-of-stake cryptocurrencies including Ethereum. The SEC isn't happy about that because Coinbase did so without registering its staking service as a security offering, it is claimed.the SEC announced yesterday, the commission isn't alleging outright malfeasance by Coinbase officials - only that it selectively ignored rules.
"While Coinbase's calculated decisions may have allowed it to earn billions, it's done 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," said SEC Division of Enforcement director Gurbir Grewal.
"Coinbase's nearly 3.5 million staking rewards program accounts nationwide are not insured … there is no protection from loss for any of these accounts, including the more than 33,000 accounts currently held by Alabama investors," the ASC said.
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