In a lightning-fast regulatory crackdown, the US Securities and Exchange Commission (SEC) has cast its regulatory net over two of the world’s most prominent cryptocurrency exchanges, Coinbase and Binance.
The SEC wasted no time, filing charges against Coinbase for allegedly functioning as an unregistered broker while designating Cardano (ADA) and other assets as securities. Surprisingly, Chairman Gary Gensler’s previous comments about crypto assets using the Proof-of-Stake (PoS) consensus mechanism were absent from the SEC’s mention.
Coinbase Comes Under the SEC’s Radar… Again
Coinbase, the heavyweight among cryptocurrency exchanges, found itself in the crosshairs of the SEC as the watchdog asserted that the platform had been operating as an unregistered broker since 2019. These charges, brought to light recently, have drawn attention to the SEC’s claim that Coinbase neglected to provide the essential disclosures customary in traditional security markets due to its failure to register. Consequently, the agency argues that investors have been left in the dark without the necessary disclosures and protective measures they rightfully deserve.
One particular aspect that triggered the SEC’s scrutiny was Coinbase’s staking program, which the agency boldly classifies as a security. Despite the SEC’s recent crackdown on staking services, Coinbase’s Chief Legal Officer, Paul Grewal, boldly announced that the exchange would continue to offer its staking service, distinguishing itself from its counterparts like Kraken.
SEC Accuses Coinbase of Offering Four Unregistered Crypto Assets, Including Cardano
In addition to these charges, the Commission further accused Coinbase of facilitating trading in unregistered securities, including FLOW, VGX, MATIC, and ADA. Interestingly, many of these assets, including the controversial Cardano, were also classified as securities in the SEC’s charges against Binance.
The SEC’s insistence on reiterating the classification of these assets as securities highlights the agency’s unwavering commitment to its stance. However, the conspicuous absence of any mention of Ether (ETH) in the charges raises eyebrows.
In previous remarks, Chairman Gary Gensler indicated that all crypto assets using the PoS consensus mechanism could potentially be considered securities. This omission adds a twist of intrigue to the SEC’s approach to classification.
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