- US SEC has taken action against Coinbase, a day after it sued Binance
- The commission claimed that the exchange violated securities law by acting as an unregistered broker-dealer
The United States Securities and Exchanges Commission (SEC) has taken another action against crypto entities this week. The one in the highlight is the leading American crypto exchange – Coinbase.
The commission claimed that the exchange operated as an unregistered securities exchange and violated securities laws put in place in the United States. The commission also raised red flags for its staking services, which had previously drawn the Wells Notice.
A press release on the same read,
“As alleged in the SEC’s complaint, Coinbase’s failure to register has deprived investors of significant protections, including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest, among others.”
It alleges that the crypto-listed firm acted as an unregistered broker by offering services via Coinbase Prime and Coinbase Wallet. Moreover, the exchange was accused of offering cryptos the classify as securities for sale. And, this happened despite the firm claiming to apply the Howey Test in its listing process.
More coins listed as securities in Coinbase lawsuit
Notably, the cryptocurrencies listed as securities in this lawsuit are Solana [SOL], Cardano [ADA], Polygon [MATIC], Filecoin [FIL], The Sandbox [SAND], Axie Infinity [AXS], Chiliz [CHZ], FLOW, Internet Computer [ICP], NEAR, Voyager Token [VGX], DASH, and NEXO.
Some of these coins, including SOL and ADA, are listed in the SEC’s lawsuit against Binance, which was released on 5 June. Moreover, the SEC emphasized Coinbase’s efforts with providing information to users on ADA in its lawsuit. This included providing information such as price movements, whitepaper, official website link, developers included, and more. The commission said,
“Because Coinbase has not registered as a broker, national securities exchange, or clearing agency, there is no formal mechanism to ensure the accuracy or consistency of the information Coinbase now selectively discloses about the crypto assets it makes available for trading, including each of the Crypto Asset Securities”
Notably, Charles Hoskinson – the creator of Cardano – had called the SEC’s lawsuit against Binance “a polticial philosophical disagreement with the very existence of cryptocurrencies.”
He also stated that the “end goal is an agenda-based CBDC partnered with a handful of massive banks and end-to-end control over every aspect of your financial life.” Notably, the crypto market did not have a significant reaction to the latest SEC action as the majority of the coins continued to hold their ground.
How much are 1,10,100 ADAs worth today?
Speaking on the lawsuit, Adam Cochran – Partner at CEHV – said,
“TL;DR: -Mostly focused on staking and a few assets. -Assets component will be thrown out by any reasonable judge -Claims a non-custodial wallet is a “broker-dealer” -Will result in fines and closing staking at most.”
Brian Armstrong responds to the SEC lawsuit
The CEO of Coinbase – Brian Armstrong – took to Twitter to speak about the SEC’s action. He stated that the company was “proud to represent the industry in court to finally get some clarity around crypto rules”. He also pointed out that the commission had given it a green signal back in 2021, when it had applied to go public.
Armstrong also stated that the SEC and CFTC have made conflicting statements about the classification of securities and commodities. This is the reason the US Congress is bringing in new legislation to support the technology. He further said,
“Instead of publishing a clear rule book, the SEC has taken a regulation by enforcement approach that is harming America. So if we need to avail ourselves of the courts to get clarity, so be it. Btw, in case it’s not obvious, the Coinbase suit is very different from others out there – the complaint filed against us is exclusively focused on what is or is not a security. And we are confident in our facts and the law.”
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