NEW YORK: The U.S. Securities and Exchange Commission on Tuesday sued Coinbase (COIN.O), accusing the largest U.S. cryptocurrency platform of operating illegally because it failed to register as an exchange.
The lawsuit is the SEC’s second in two days against a major crypto exchange, following its case against Binance, the world’s largest cryptocurrency exchange, and founder Changpeng Zhao.
Both civil cases are part of SEC Chair Gary Gensler’s push to assert jurisdiction over crypto markets, which he on Tuesday again labeled a “Wild West” of investing, and protect investors while shoring up their trust in capital markets.
“The crypto markets are undermining that trust, and I would say this: it undermines our overall capital markets,” Gensler told CNBC.
Crypto companies including Coinbase have said SEC rules are unclear, and the regulator is overreaching by asserting oversight of their industry.
Paul Grewal, Coinbase’s general counsel, in a statement said the company will continue operating as usual and has a “demonstrated commitment to compliance.”
Ten U.S. states led by California are also accusing Coinbase of securities law violations concerning its staking rewards program.
Shares of Coinbase’s parent Coinbase Global Inc were down $6.42, or 10.9%, at $52.29 in afternoon trading, after earlier falling as much as 20.9%.
Coinbase customers withdrew more than $57 million within a couple of hours of the SEC filing, the data firm Nansen said.
