The Securities and Exchange Commission has sued cryptocurrency exchange Coinbase for allegedly violating securities laws.
The federal lawsuit, filed Tuesday (June 6), comes one day after the Securities and Exchange Commision (SEC) took similar action against crypto giant Binance. It also marks the latest step in the agency’s ongoing conflict with Coinbase, the largest crypto platform in the U.S.
According to the suit, Coinbase has, since 2019, “made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities.”
In a statement provided to PYMNTS Tuesday, Coinbase Chief Legal Officer and General Counsel Paul Grewal criticized the SEC’s “reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry.”
Related: Coinbase Says It’s Ready For Litigation With SEC
He also said that Coinbase and companies like it have shown they are committed to compliance.
“The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation,” Grewal said. “In the meantime, we’ll continue to operate our business as usual.”
The SEC’s suit argues that Coinbase’s business “intertwines the traditional services of an exchange, broker, and clearing agency” without registering those functions with the SEC, as the law requires.
In doing so, the complaint says, Coinbase has prevented investors from gaining “significant protections,” such as SEC inspections, recordkeeping requirements, and safeguards to prevent conflicts of interest.
“You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a news release.
“Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them. 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.”
Coinbase sued the SEC in April to force it to respond to its rulemaking petition, arguing in a court filing that it was unreasonable for the SEC — an agency with over 4,500 employees — to take nine months (and counting) to complete that simple task.”
