Coinbase Global (COIN:US) saw its shares tumble on Tuesday after the U.S. Securities and Exchange Commission (SEC) sued the digital assets business for allegedly operating as an “unregistered securities exchange.”
The complaint was filed in the U.S. District Court for the Southern District of New York on Tuesday.
Coinbase stock fell 9% on Monday after the SEC sued rival Binance and its founder Changpeng Zhao. The stock then opened as much as 20% lower on Tuesday to trade at levels lower than $50 apiece for the first time in nearly six months.
The U.S. securities regulator said the crypto exchange business made “billions of dollars unlawfully facilitating the buying and selling of crypto asset securities” since at least 2019.
Coinbase offers services such as exchange, broker, and clearing agency – functions that are separated in other parts of the market, the SEC said in a press release.
“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,” said SEC Chair Gary Gensler.
Moreover, the company didn’t register its staking-as-a-service program, which is “depriving investors of critical disclosure and other protections.”
The press release contains strong language with Gurbir Grewal, Director of the SEC’s Division of Enforcement, telling Coinbase that it “simply can’t ignore the rules because you don’t like them or because you’d prefer different ones.”
Congress members Shri Thanadar, Marie Newman, and Garret Graves traded Coinbase shares in 2022. The stock sharply fell last year as Bitcoin (BTC:US) prices plunged amid the aggressive rate-hike campaign by the FED.
Coinbase shares traded as much as 90% lower in December last year compared to the all-time high set on the IPO day in April 2021.