In a bold move, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against popular cryptocurrency exchange Coinbase (NASDAQ: COIN) in a New York court, with charges leveled against the firm including operating as an unregistered broker and exchange, with the SEC demanding the company cease these actions permanently.
According to CNBC, the price of Coinbase’s shares dropped 15% in premarket trading after the lawsuit was filed, in a move that comes on the heels of a 9% drop in COIN’s shares after the SEC filed charges against leading cryptocurrency exchange Binance and its founder, Changpeng Zhao.
The complaint alleges that Coinbase’s main prime brokerage, exchange, and staking programs are in clear violation of securities laws. In its indictment, the SEC maintains that Coinbase has continually resisted regulatory structures and bypassed the disclosure requirements mandated by U.S. securities law.
The SEC’s allegations extend to a number of cryptoassets available on Coinbase’s platform. The regulator pointed to these, which include solana’s $SOL and Cardano’s $ADA tokens, as securities.
In a public announcement, SEC chair Gary Gensler said:
“We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions.”
Coinbase shares are now trading at $49 after hitting a high above $85 this year. Year-to-date, COIN shares are up around 60% after they fell to an all-time low around $35. Coinbase shares are still down around 84% since they first started trading.
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