Coinbase (COIN) stock sank nearly 20% at the market open on Tuesday as the Securities and Exchange Commission sued the crypto exchange, alleging that it acted as an unregistered exchange and broker.
The SEC alleged in a lawsuit filed in federal court that the crypto firm broke securities law by not registering with the SEC before operating in the US. Specifically, the SEC states Coinbase acted as an exchange, a broker, and a clearing agency, without registering with the agency.
“Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC,” SEC Chair Gary Gensler said in a statement.
Coinbase did not immediately respond to a request for comment from Yahoo Finance on the lawsuit.
Coinbase, the largest crypto asset trading platform in the US, held more than $130 billion in assets on its platform as of March 31, according to the company.
Tuesday’s SEC complaint comes a day after the SEC filed a lawsuit against Binance Holdings, the world’s largest crypto exchange. That lawsuit claimed similar infractions of Binance including that the crypto trading platform failed to register as an exchange, broker, or clearing agency.
The crypto space has been in turmoil since the collapse of FTX late last year. The popular crypto exchange, once valued at $32 billion, unraveled throughout fall 2022 as a growing number of details of alleged fraudulent activity were revealed. FTX’s former CEO Sam Bankman-Fried now faces criminal charges that he allegedly stole billions of FTX customer funds and misled investors.
Coinbase had been one of the remaining options for investors to easily purchase cryptocurrency as bitcoin roughly doubled from its November and breached the $30,000 mark once again before falling this week.
Josh is a reporter for Yahoo Finance.
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Source: https://finance.yahoo.com/news/coinbase-sued-by-sec-stock-tumbles-nearly-20-132345891.html