SEC Sues Coinbase for Alleged Securities Violations

The SEC just sued Binance over alleged securities violations — now, the agency is coming for top US crypto exchange Coinbase

article-image

AevanStock/Shutterstock modified by Blockworks

share

The SEC is suing Coinbase a day after it went after Binance.

In the lawsuit, filed on Jun. 6, the SEC alleges that Coinbase has been operating as an unregistered exchange. 

The SEC names Coinbase and CGI — Coinbase’s holding company — as defendants in the suit. The lawsuit alleges:

“Since at least 2019, through the Coinbase Platform, Coinbase has operated as: an unregistered broker, including by soliciting potential investors, handling customer funds and assets, and charging transaction-based fees; an unregistered exchange, including by providing a market place that, among other things, brings together orders of multiple buyers and sellers of crypto assets and matches and executes those orders; and an unregistered clearing agency, including by holding its customers’ assets in Coinbase-controlled wallets and settling its customers’ transactions by debiting and crediting the relevant accounts.”

The commission also claims that staking-as-a-service products offered by Coinbase are in violation of the Securities Act of 1933 because “the Staking Program includes five stakeable crypto assets, and the Staking Program as it applies to each of these five assets is an investment contract, and therefore a security.”

Similar to the Binance suit filed on Jun. 5, the SEC is alleging that Coinbase did not ensure that the crypto assets being sold were not securities as defined by the Howey test

Read more: The SEC Allegations Against Binance: How Bad Is It?

“But while paying lip service to its desire to comply with applicable laws, Coinbase has for years made available for trading crypto assets that are investment contracts under the Howey test and well-established principles of the federal securities laws,” the SEC claims.

  • In the suit, the SEC labels 13 crypto assets as securities, specifically SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO. 
  • In the Binance lawsuit, the SEC named SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI, as well as Binance’s native tokens, BNB and BUSD.

The lawsuit is the latest in an ongoing battle between Coinbase and the SEC. The exchange was served with a Wells notice earlier this year, which led Coinbase to sue the SEC, asking for regulatory clarity.

When the court ordered the SEC to respond, the regulator said that Coinbase could not make demands for regulatory clarity. 

“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. 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,” Coinbase Chief Legal Officer Paul Grewal told Blockworks via email.

Updated June 6, 2023 at 10:11 am ET: Added comment from Coinbase’s Paul Grewal.

Updated June 6, 2023 at 8:38 am ET: Added context throughout.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The goal, per Santiago Santos, is to make crypto a relatable piece of tech for people who may not even understand it

article-image

Stripe stablecoin unit aims to operate under a federal charter enabling regulated stablecoin issuance and custody services

by Blockworks /
article-image

Will TradFi make crypto better or create more problems than it solves?

article-image

Subtle decisions by risk curators saved Aave from significant turmoil

article-image

The new Rootstock Institutional unit aims to connect professional investors to Bitcoin-native yield and liquidity strategies anchored in BTC’s security layer

by Blockworks /
article-image

DOJ files record civil forfeiture against more than 127,000 BTC linked to scam activity

by Blockworks /