The Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase on Tuesday, accusing the cryptocurrency exchange of operating as an unregistered broker. The lawsuit sent shockwaves through the crypto market, sending Coinbase’s stock price down 13% in a single day.
The SEC alleges that Coinbase has been facilitating cryptocurrency trades since at least 2019 without registering as a broker with the agency.
The agency also claims that Coinbase has failed to provide investors with important disclosures about the risks of trading cryptocurrencies.
Coinbase has denied the SEC’s allegations and said it will vigorously defend itself against the lawsuit. The company said it believes it is “fully compliant with the law” and that its “business model is lawful.”
The SEC’s lawsuit is the latest sign of increased scrutiny of the cryptocurrency industry by regulators. The agency has been investigating several other cryptocurrency companies, including Binance and Kraken.
The lawsuit is also a major setback for Coinbase, which went public in April at a valuation of $85 billion. The company’s stock price has been on a downward trend since its IPO, and the SEC lawsuit is likely to further depress its value.
The outcome of the SEC’s lawsuit against Coinbase could have a significant impact on the cryptocurrency industry. If the SEC is successful in its lawsuit, it could force Coinbase to register as a broker and comply with stricter regulations.
This could set a precedent for other cryptocurrency companies and could make it more difficult for them to operate.
