SEC sues Coinbase, continues major crackdown on cryptocurrency exchanges

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Just one day after suing Binance, the US Securities and Exchange Commission (SEC) has now sued Coinbase, the largest cryptocurrency exchange operating in the US.

The SEC alleged that Coinbase has violated laws since "at least 2019" by failing to register both its cryptocurrency trading platform and its crypto asset-staking program. Director of the SEC’s Division of Enforcement, Gurbir S. Grewal, said in a press release that Coinbase chose not to register, making "calculated decisions" that "may have allowed it to earn billions" while knowingly depriving Coinbase investors of SEC protections.

"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,” Grewal said. "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."

Coinbase chief legal officer and general counsel Paul Grewal provided Ars with a statement echoing Coinbase's long-held stance that the SEC's crackdown on crypto exchanges is an overstep. Coinbase maintains that Congress needs to pass clear laws regarding digital assets before enforcement is appropriate.

“The SEC's reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance," Coinbase's Grewal said. "The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual.”

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