[NEWS] SEC files lawsuit against Binance and Coinbase for violating securities laws

The U.S. Securities and Exchange Commission (SEC) announced on the 6th that it filed a lawsuit against cryptocurrency exchange Coinbase in the U.S. District Court for the Southern District of New York.

According to the announcement, the lawsuit alleges that Coinbase operated exchange, brokerage, and clearing services without registering with the SEC, and offered and sold unregistered securities. The unregistered securities included the staking service offered by Coinbase.

The lawsuit states that Coinbase's staking service is a mechanism for users to earn profits through PoS (Proof of Stake) and the exchange's efforts, and therefore required registration with the SEC.

These multiple violations led to insufficient SEC investigations, record-keeping requirements, and protections against conflicts of interest, and Coinbase was criticized for failing to provide important customer protection.

SEC Chairman Gary Gensler commented in the announcement, "Coinbase illegally offered the functions of an exchange, broker, and clearing organization by conflating them with the functions of an exchange, broker, and clearing organization, despite being subject to securities laws."

SEC Director Gurbir S. Grewal also accused Coinbase of knowingly failing to comply with the federal securities laws that apply to its business.

The SEC listed stocks that qualify as securities in its complaint. Specifically, it listed Solana (SOL), Ada (ADA), Polygon (MATIC), Filecoin (FIL), and Chiliz (CHZ).

The lawsuit against Coinbase was anticipated in advance because the SEC sent a Wells Notice in March this year, informing companies and individuals that it plans to take legal action. Against this background, Coinbase filed a limited lawsuit in April seeking a response to a petition for clarification of cryptocurrency regulations that it filed in July last year.

The SEC also filed a lawsuit against cryptocurrency exchange Binance on the 5th for violating securities laws, making it clear that it is tightening its grip on cryptocurrency-related companies. On the 6th, the SEC also asked the court to freeze assets related to Binance US, Binance's US subsidiary.

Source: SEC
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