Securities and Exchange Commission Sues Coinbase

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The Securities and Exchange Commission brought a lawsuit against Coinbase on Tuesday morning, in a New York federal court, accusing the company of acting as an unregistered broker and exchange and seeking it to be “permanently restrained and enjoined” from continuing such activity.

In reaction, premarket trading saw the stock fall by 22%, following a 9% dip the day before as the SEC filed charges against rival crypto exchange Binance and its founder Changpeng Zhao.

Speaking on CNBC, SEC chair Gary Gensler said:

“These trading platforms, they call themselves exchanges, are commingling a number of functions… We don’t see the New York Stock Exchange operating a hedge fund.”

The complaint also highlighted that Coinbase’s flagship prime brokerage, exchange and staking programs were in violation of securities law with the regulator alleging it had commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions.

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