SEC Sues Crypto Giant Coinbase

The US Securities and Exchange Commission (SEC) has sued Coinbase alleging that the company operated as an unregistered broker and exchange. The SEC claims that Coinbase's prime brokerage, exchange, and staking programs violated securities laws by evading regulatory requirements. The lawsuit specifically mentions Coinbase's institutional service, retail exchange, and self-custody Wallet service in the complaint. Coinbase had previously received a Wells notice from the SEC, indicating impending action, and had been preparing for potential legal action. Although Coinbase has positioned itself as a regulated and secure platform, the SEC argues that its advertising and solicitation of new clients contribute to its classification as a broker or exchange. Coinbase shares dropped by 15% in premarket trading following the news.