Coinbase, the popular cryptocurrency exchange platform, has been sued by the U.S. Securities and Exchange Commission (SEC) for allegedly breaking US securities rules.
The SEC alleges that Coinbase has been offering unregistered security-based swaps to its customers since 2015 in violation of federal securities laws. According to the complaint, Coinbase did not register with the SEC as a broker-dealer or a swap dealer and failed to comply with other applicable requirements.
The lawsuit comes after months of silence from the federal regulator on Coinbase’s July 2019 application for a digital asset trading license. The company had sought clarity on how it should operate under existing regulations but received no response from the SEC. In April 2021, Coinbase took legal action against the SEC in an effort to force them to provide an answer on their application.
The SEC is seeking injunctive relief and civil penalties against Coinbase for its alleged violations of federal securities laws. If found guilty, Coinbase could face significant fines and be forced to cease operations until they are compliant with all applicable regulations.
This case could have far-reaching implications for the crypto industry as a whole and could set a precedent for other exchanges operating in the US market. It remains to be seen how this case will play out and what impact it will have on the industry going forward.