US Sues Coinbase Amid Crypto Crackdown
Coinbase team goes to New York to prepare for Nasdaq listing next year.
The US charged the largest cryptocurrency trading platform in the country. They say it's because they're operating illegally. The US is cracking down on the industry.
Coinbase didn't register as required by SEC while serving as a broker, exchange, and clearing agency for investments under the SEC's regulations.
The organization stated that the company was not being supervised properly. This allowed them to avoid being monitored for conflicts of interest.
Coinbase mentioned unclear rules.
Coinbase's chief legal officer, Paul Grewal, said that the answer is a law that has equal and open rules for the road. He added that this is better than suing. Grewal mentioned that they will keep operating their business the same way in the meantime.
Yesterday, the SEC sued Binance, which is the biggest cryptocurrency trading platform. The SEC claims that Binance did not handle customer money correctly, they boosted the trading volume, and took steps to hide from US laws. After this news, someone also complained about Coinbase.
The government will monitor the cryptocurrency industry more strictly. They say that many digital currencies are like other investments, so they should be regulated.
After FTX's collapse last year, efforts to improve scrutiny have increased. This event prevented customers from reaching their funds.
The SEC's enforcement division director, Gurbir S Grewal, claims Coinbase was aware of federal securities laws but chose not to abide by them.
Ignoring rules is not an option. The consequences are too huge for the investors. You cannot prefer your own set of rules. It's not acceptable.
Coinbase started in 2012. It has over 100 million customers. Every day, it trades billions of dollars' worth of digital assets like Bitcoin.
In 2021, the company went public during the crypto boom. Its market worth was almost $100 billion.
Coinbase's shares have dropped a lot after the drop in cryptocurrency values last year. It's currently valued at under $12 billion.
The company's shares dropped over 14% when they found out about the lawsuit. The lawsuit was filed in New York federal court.
Coinbase was warned in March by the SEC that they might face legal trouble. The company found this upsetting but had been trying to register with authorities. Sadly, there didn't seem to be a clear route for crypto companies to do so. Coinbase has even considered moving to London or elsewhere to avoid issues.
Mr Grewal said on Tuesday that the SEC's approach of only enforcing regulations without clear rules for the digital asset industry is damaging America's economic competitiveness. According to him, companies like Coinbase that comply with regulations are also being affected.
The head of the Blockchain Association said laws for the industry are still being talked about in Congress. He thinks the SEC didn't have enough evidence.
Coinbase got sued by the SEC on the same day Mr Grewal was supposed to speak in Washington. He was going to talk about making laws for some digital assets.
Kristin Smith, the CEO of the Blockchain Association, says that the SEC only makes accusations, not laws. She also believes that the courts will prove that Gary Gensler, the chairman of the SEC, is wrong.
