Unusual Whales

Coinbase sued by SEC over staking program, alleging it operated as an unregistered exchange and broker

Unusual Whales -

Per CNBC

Coinbase was recently sued by the SEC over its staking program. This included allegations that the crypto company acted as an unregistered exchange and broker.

The allegation also specifies how "13 assets listed on its platform were considered crypto securities." The exchange reportedly saw its shares drop by 16% in morning trading after already falling 9% a day before as the SEC charged Binance and CZ.

SEC chair Gary Gensler gave a statement to CNBC regarding the situation.

Gensler: “We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions,”

Paul Grewal, the chief legal officer at Coinbase, also gave a statement regarding what the SEC was doing. It was noted that the there was a lack of clear ruling regarding the digital asset industry.

Grewal: “The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance,”

Grewal noted that the solution should be fair rules transparently developed and equally applied and "not litigation." It was then noted that the exchange would still continue its business operations.

In March, it was reported that Coinbase Global reportedly got a Wells Notice from SEC Staff in their Item 7.01 Regulation FD Disclosure. This came as the SEC threatened to sue Coinbase with potential enforcement actions that would be tied to parts of Coinbase's spot market and Earn, Prime, and Wallet offerings.

In July 2022, it was reported that Coinbase was facing an SEC probe into whether it would allow Americans to trade digital assets that should have been registered as securities. This comes even before an SEC investigation that previously led to it suing a former Coinbase manager and two other people over an alleged insider trading scheme.

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