3 Takeaways from the Lawsuit Between the SEC and Coinbase

The US Securities and Exchange Commission (SEC) charges against Coinbase are largely reminiscent of its Binance case from just a day earlier – but there are some key differences as well.

Here’s a closer look at the text and implications of the commission’s 101-page lawsuit against America’s largest crypto exchange.

Coinbase and Binance: Comparison of Lawsuits

Likes very much binance lawsuit On Monday, the SEC’s first charge Coinbase was purporting to act as a broker, national securities exchange, or clearing agency, and yet neglected to register as such a business.

According to the commission, failure to register has “deprived investors of the disclosure and protection” they are entitled to, and thus exposed them to “significant risk”.

The filing also accused Coinbase of listing a plethora of “crypto-asset securities” on its platform. 13 cryptocurrency name that fits the bill. These include several top 20 cryptos by market capitalization, such as Solana (SOL), Cardano (ADA), and Polygon (MATIC).

Coinbase has claimed in the past to apply the Howe test – the SEC’s primary litmus test for determining whether a financial asset constitutes an investment contract – when reviewing an asset for listing on its platform. Is. According to the firm, it rejects 90% of assets due to legal standards and does not list any security.

Nevertheless, the SEC accused Coinbase of merely paying “lip service” to the consideration of legal compliance: “Coinbase has provided for years trading crypto assets that meet the Howe test and well-established principles of the federal securities laws.” There are investment contracts,” “it said.

In the Binance lawsuit, the SEC only designated BNB and BUSD as securities.

The SEC’s third allegation relates to Coinbase’s stake-as-a-service product, which the exchange did not register with the commission. The program lets users stake their proof-of-stake crypto assets through Coinbase’s platform and earn a yield, while Coinbase earns a 25-35% commission.

The agency already targeted “BNB Vault”, “Simple Earn” and “Staking” schemes available through Binance US on Monday. State level securities regulators also started aimed at Coinbase for its staking product on Tuesday including in Alabama, California and others.

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