The United States Securities and Exchange Commission (SEC) has made a move against the cryptocurrency sector by suing two major platforms: Binance, the world’s largest crypto platform, and Coinbase, the only one listed on the Stock Exchange. The SEC has been pushing for stronger regulation of the sector for months. On Tuesday, the SEC sued Coinbase for operating as a stock exchange, stockbroker and clearinghouse to guarantee exchanges between investors, credit institutions and other financial agents, without being registered.
The SEC maintains that Coinbase illegally facilitated the buying and selling of crypto-asset securities since at least 2019, mixing traditional stock market services with those of a stockbroker without being registered for any of those functions. Following news of the lawsuit, the platform’s shares dropped by over 20%, although they later recovered. Yesterday, the SEC filed a total of 13 charges against Binance and its founder, Changpeng Zhao, accusing them of blatantly ignoring US stock market laws and earning billions of dollars in exchange for putting assets at “significant risk” of their clients.
The announcement by the SEC comes on the heels of Coinbase releasing a statement on the need for clear rules on cryptocurrency to protect consumers and American leadership. The platform argues that digital currencies “are solving real-world problems” and a clear path to protect responsible innovation is needed, warning that the US is falling behind. The platform’s legal advisor, Paul Grewall, is scheduled to testify before a congressional committee on a legal draft to regulate the structure of the digital asset market.
It’s not the first time that Coinbase, or other cryptocurrency platforms, have been persecuted in the United States. In January, Coinbase agreed to pay the state of New York $100 million (half of it in fines) for violating regulations related to consumer protection, cybersecurity, and money laundering. In February, the SEC indicted Terraform Labs and its CEO, Do Kwon, for fraud related to the sudden crash of its cryptocurrencies TerraUSD and Luna in May 2022.
The US regulator has also gone after celebrities and personalities who have promoted crypto assets without disclosing their sponsorship or compensation. Kim Kardashian, the former NBA player Paul Pierce, the actress Lindsay Lohan, and the singer Austin Mahone have all been targeted for illegally promoting crypto assets. Additionally, Justin Sun, the owner of Tron, BitTorrent, and Rainberry platforms, was charged with orchestrating a scheme to hide that promotions were sponsored and manipulating the market to inflate TRX trading volume.