SEC Cracks Down on Crypto Sector: Coinbase Accused of Breaching Securities Laws

The US Securities and Exchange Commission (SEC) is ramping up its crackdown on the cryptocurrency sector, with major exchanges Coinbase and Binance in its crosshairs. Just a day after suing Binance, the SEC has now accused Coinbase, the largest crypto exchange in the US, of breaching securities laws.

In a filing with a federal court in New York, the SEC alleged that Coinbase has been operating as a broker, exchange, and clearing house without the necessary registrations. The watchdog claimed that Coinbase has been earning billions of dollars in revenue from transaction fees, all while depriving investors of necessary disclosures and protections.

The SEC stated that Coinbase has been aware since at least 2016 that cryptocurrencies are financial assets regulated by the SEC, yet the exchange has continued to allow trading of these assets without proper registration. The news of the lawsuit caused the price of Bitcoin to drop by 1% to £20,543, and Nasdaq-listed Coinbase’s shares fell by 17.3% to $48.56 in premarket trading.

This comes on the heels of the SEC’s lawsuit against Binance, the world’s largest crypto exchange, and its founder Changpeng Zhao. The SEC accused Binance of running unregistered crypto trading platforms and selling unregistered crypto products, alleging that they have enriched themselves at the expense of investors.

Following the announcement of the lawsuit, Binance saw $1.6 billion in Ethereum outflows, the largest single-day net outflow since March. With regulators cracking down on major players in the crypto sector, the future of these exchanges remains uncertain as they navigate legal challenges and regulatory scrutiny.