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SEC filed a lawsuit against Coinbase

Few names demand as much respect and reputation in the bitcoin world as Coinbase. Coinbase, founded in 2012 by Brian Armstrong and Fred Ehrsam, has grown to become a global cryptocurrency exchange as well as one of the most trusted platforms for purchasing, selling, and storing digital assets. Coinbase has played a critical role in popularizing cryptocurrencies and bridging the gap between traditional finance and the digital economy, thanks to its user-friendly design, rigorous security measures, and commitment to regulatory compliance.

June 8, 2023 at 12:30 pm

Updated June 8, 2023 at 12:30 pm


A Reliable Platform for Cryptocurrency Enthusiasts:

Coinbase has built a reputation for being a trustworthy platform that prioritizes the safety and security of its users’ assets. Its user-friendly interface makes it simple for newcomers to explore and interact with cryptocurrencies, while also providing extensive trading tools for seasoned traders. Coinbase accepts a wide variety of digital assets, including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and many others, allowing users to diversify their investment portfolios and learn about new blockchain projects.
But, is it all as it seems?

The Securities and Exchange Commission sued Coinbase on Tuesday, accusing the
largest US cryptocurrency platform of operating illegally due to its failure to register as
an exchange.

The SEC’s lawsuit is the second against a major cryptocurrency exchange in two days,
after its case against Binance, the world’s largest cryptocurrency exchange, and its
founder, Changpeng Zhao.

Wild West

Both legal cases are part of SEC Chair Gary Gensler’s push to exert authority over the crypto business, which he called a “Wild West” on Tuesday, undermining investor trust in the US capital markets.
According to Gensler, the entire business model is based on noncompliance with US securities rules, and we are requesting that they comply.
The SEC’s recommendations, according to crypto companies, are vague.
Coinbase’s general counsel stated in a statement that the company will continue to operate as usual and has demonstrated a commitment to compliance.
Coinbase Global Inc, Coinbase’s parent firm, was down $6.42, or 12.8%, at $52.29 after falling as far as 20.9% earlier.
Customers withdrew more than $57 million from Coinbase within a few hours of the SEC filing, according to analytics firm Nansen.

Crypto assets

The SEC claimed in a complaint filed in federal court in Manhattan that Coinbase has earned billions of dollars by operating as a middleman on cryptocurrency exchanges since at least 2019, while avoiding disclosure regulations designed to protect investors.
Based to the SEC, Coinbase traded a minimum of 13 crypto assets that should have been registered as securities, including cryptocurrencies such as Solana, Cardano, and Polygon.
Coinbase, which launched in 2012, recently served over 108 million customers and had $130 billion in consumer crypto assets and funds on its bank sheet at the end of March. Last year, transactions contributed to 75% of its $3.15 billion in net revenue.

Fine for unregistered securities

Coinbase’s stake rewards program, which has over 3.5 million customers, pools crypto assets and utilizes them to maintain activity on the blockchain network in exchange for “rewards” which it provides customers after collecting a commission.
Alabama, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin are also participating in the initiative. Coinbase received a fine of $5 million by the state of New Jersey for selling securities that were unregistered.

Rules can not be ignored

The SEC action announced on Tuesday seeks civil fines, recoupment of ill-gotten gains, and injunctive options for resolution. In March, the SEC informed Coinbase that charges were potential.
SEC Enforcement Chief Gurbir Grewal stated in a statement that they cannot just disregard the regulations because they do not agree with them.
As a result of Gensler’s crypto crackdown, the industry has raised compliance, delayed projects, and relocated outside of the country.
Kristin Smith, CEO of the Blockchain Association, has rejected Gensler’s efforts to set industry rules. She indicated that BA is certain that the courts will ultimately prove Chair Gensler wrong.

Binance was the first, and now Coinbase is being sued

On Monday, the SEC charged Binance with overestimating trading activity, diverting user funds, illegally merging assets, failing to keep rich US clients off its platform, and misrepresenting its controls to customers.

If you want more information about SECs lawsuit for Binance, you can read it on our blog  The role of SEC in crypto

Following Monday’s revelation, investors withdrew approximately $790 million from Binance and its US affiliate, according to analytics firm Nansen on Tuesday morning.

Binance has declared that it will fight the action vigorously, claiming that it represents
the SEC’s “misguided and conscious refusal” to offer clarity to the crypto industry.

Coinbase’s conflict with Gensler started in 2021, when the SEC (Securities and Exchange
Commission) threatened to take action against Coinbase if it allowed customers to
generate money by lending digital currencies.

Together, these two corporations account for roughly half of all global trade in digital
assets such as bitcoin.

The cases are part of a broader assault on the cryptocurrency industry.


The rise of cryptocurrencies and blockchain technology has ushered in a new era of decentralized finance, capturing the attention of investors, entrepreneurs, and individuals all around the world. However, as the crypto market evolves, it is critical to acknowledge and respect the regulatory framework within which these digital assets function.
Respecting SEC guidelines is critical for the crypto world’s future development and maturation. The SEC plays a critical role in safeguarding the integrity and credibility of the cryptocurrency market by protecting investors, combatting fraud, increasing market transparency, and encouraging institutional use. Adherence to regulatory frameworks protects investors while also encouraging responsible innovation and attracting established financial firms. As the crypto business evolves, collaboration among regulators, companies, and investors will be critical in order to build a sustainable and regulated environment that benefits all stakeholders.


Remember, investing in cryptocurrencies involves risks, and it’s important to conduct thorough research and seek professional advice before making any financial decisions.


(Please keep in mind that this post is solely for informative purposes and should not be construed as financial or investment advice.)

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