SEC Files Lawsuit Against Coinbase, Adding to Regulatory Challenges fo

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SEC Files Lawsuit Against Coinbase, Adding to Regulatory Challenges for Crypto Industry

06/06/23 02:40 pm

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The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Coinbase, the largest cryptocurrency platform in the United States.

The SEC accuses Coinbase of operating illegally by failing to register as an exchange. This lawsuit comes as another blow to the crypto industry, following the SEC's recent case against Binance, the world's largest cryptocurrency exchange.

SEC Chair Gary Gensler has been vocal about asserting jurisdiction over the crypto industry, referring to it as a "Wild West" that has eroded investor trust in U.S. capital markets.

Crypto companies argue that the SEC's rules are ambiguous, and they believe the agency is exceeding its authority by attempting to regulate them. In response to the lawsuit, Coinbase's general counsel, Paul Grewal, stated that the company will continue its operations as usual and emphasizes its commitment to compliance.

Additionally, Coinbase faces accusations of securities law violations regarding its staking rewards program from ten U.S. states, led by California.

The lawsuit has had a significant impact on Coinbase's stock, with shares of its parent company, Coinbase Global Inc, dropping by 12.8% ($6.42) to $52.29, with a previous dip of up to 20.9%.

Furthermore, following the SEC filing, Coinbase customers withdrew more than $57 million within a short period, according to data firm Nansen. The outcome of the lawsuit and its implications for the broader crypto industry remain uncertain as the legal proceedings unfold.

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