Cryptocurrencies and stocks of companies related to the industry continued to fall on Tuesday after the US securities regulator sued Coinbase, the largest cryptocurrency exchange in the country, for allegedly violating multiple federal securities laws.
Coinbase (COIN) stock, which counts Cathie Wood’s ARK Invest, The Vanguard Group, Fidelity, and BlackRock, among some of its top shareholders, plunged as low as 20% in pre-market trading on Tuesday before paring some of the losses, according to TradingView.
Altcoins Lead Losses
Also, altcoins (digital assets alternative to Bitcoin) including Solana (SOL), Cardano (ADA), and Polygon (MATIC), were listed in the lawsuit and were affected by the ordeal. As of press time, SOL, ADA, and MATIC were down, 5%, 7%, and 10%, respectively, in the weekly chart.
As reported by Finance Magnates on Tuesday, the SEC sued Coinbase for operating an illegal trading platform and dealing in unregistered securities. Specifically, the federal securities watchdog claims that Coinbase combined the functions of an exchange, a broker, and a clearing agency, which should have been offered separately according to the law.
"By collapsing these functions into a single platform and failing to register with the SEC as to any of the three functions, and not having qualified for any applicable exemptions from registration, Coinbase has for many years defied the regulatory structures and evaded requirements that Congress and the SEC have constructed for the protection of the national securities markets and investors," the lawsuit alleged.
Additionally, the commission faults the exchange for operating a digital asset staking-as-a-service programme without the required license or authorization.
"Coinbase had never had a registration statement filed or in effect with the SEC for its offers and sales of its Staking Program, thereby depriving investors of material information about the program, undermining investors’ interests, and violating the registration provision of the Securities Act of 1933," the SEC explained in the complaint.
Binance in the Storm
Coinbase is not the only cryptocurrency exchange at loggerheads with the SEC; its counterpart and the top digital asset exchange, Binance, was hit with similar charges, including allegations of comingling investors’ funds, on Monday.
Moreover, the regulator has accused Binance’s Co-Founder, Changpeng Zhao, of secretly controlling Binance.US to evade regulations. Binance.US is an affiliate of the exchange in the United States and was meant to be independent of the parent company.
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This article was written by Jared Kirui at www.financemagnates.com.
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