Coinbase on Tuesday became the second cryptocurrency platform in as many days to face charges from the U.S. Securities and Exchange Commission, which claims the company made “billions of dollars unlawfully.”
The SEC sued Coinbase, a cryptocurrency exchange service, for allegedly not registering as a national securities exchange, broker and clearing agency, therefore failing to provide “significant protections” to its investors, the federal agency said.
“You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” Gurbir Grewal, the director of the SEC’s Division of Enforcement, said in a statement Tuesday.
“As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them,” Grewal continued. “While Coinbase’s calculated decisions may have allowed it to earn billions, it’s done so at the expense of investors by depriving them of the protections to which they are entitled.”
The SEC submitted the complaint to Manhattan Federal Court.
“The complaint seeks injunctive relief, disgorgement of ill-gotten gains plus interest, penalties and other equitable relief,” the SEC said.
The Coinbase claims come a day after the SEC filed charges against Binance — the top global crypto-trading platform — and founder Changpeng Zhao. The complaint against Binance includes an allegation the international company detailed rules restricting U.S. customers, then allowed high-value U.S. customers to trade on its website anyway, according to the SEC.
[ SEC sues crypto exchange Binance, CEO ‘CZ’ for violation of U.S. rules ]
“Through 13 charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law,” SEC Chairman Gary Gensler said Monday.
“They attempted to evade U.S. securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value U.S. customers on their platforms.”
Following the Binance filing, the price of the digital currency Bitcoin fell by 5.5% on Monday, according to CNBC. Coinbase shares, meanwhile, dropped by 16% on Tuesday.