After months of indications the US Securities and Exchange Commission (SEC) would sue US crypto giant Coinbase, it’s finally happened.
The lawsuit filed Tuesday in the Southern District of New York accuses Coinbase and its parent company, CGI, of breaking securities law by acting as an unregistered broker for its main crypto trading platform, its Coinbase Prime product, and the Coinbase Wallet. In addition to those alleged violations, the SEC is suing over Coinbase’s staking-as-a-service platform that allows its customers to earn a return for participating in “proof of stake” blockchains.
Crypto assets that the SEC’s lawsuit says count as unregistered securities offered by Coinbase include tokens for Solana (SOL), the Axie Infinity game (AXS), the Polygon blockchain (MATIC), The Sandbox virtual world (SAND), and the “Chiliz” (CHZ) token operated by fan token company Socios, and several others.
In a statement, SEC chair Gary Gensler said, “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. Further, as we allege, Coinbase never registered its staking-as-a-service program as required by the securities laws, again depriving investors of critical disclosure and other protections.”