The mobile phone icon for the Coinbase app is shown in this photo, in New York, Tuesday, April 13, 2021. The Securities and Exchange Commission is charging Coinbase with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency. (AP Photo/Richard Drew, File)
By Michelle Chapman
Coinbase has been targeted by U.S. regulators in a new lawsuit Tuesday that alleges the cryptocurrency platform is operating as an unregistered securities platform and brokerage service.
The lawsuit from the Securities and Exchange Commission comes only a day after it filed charges against Binance, the world's largest crypto exchange, and its founder Changpeng Zhao are accused of misusing investor funds, operating as an unregistered exchange and violating a slew of U.S. securities laws.
Coinbase shares plunged nearly 15% early Tuesday.
In its complaint, the SEC said Coinbase made billions acting as the middle man for cryptocurrency buyers and sellers but did not give investors lawful protections while acting as a broker.
“Coinbase has for years defied the regulatory structures and evaded the disclosure requirements that Congress and the SEC have constructed for the protection of the national securities markets and investors,” the SEC said in its complaint, which was filed in U.S. District Court for the Southern District of New York. It seeks injunctive relief, disgorgement of ill-gotten gains plus interest, penalties, and other equitable relief.
Coinbase said the SEC has not been transparent in how it regulates cryptocurrencies.
“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," said Paul Grewal, chief legal officer and general counsel for Coinbase, said in a written statement. 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.”
The SEC had warned Coinbase in March that it could face securities charges and had long signaled that Coinbase had been flouting securities laws with its position that cryptocurrencies were not securities and therefore did not need to register as a broker.
“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,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement, in a prepared statement.
The Federal Reserve announced it would begin tapering asset purchases in mid-November and that it would keep interest rates low. Stocks hit a record high on the announcement. Dan Eye, Head of Asset Allocation & Equity Research at Fort Pitt Capital Group, joins Cheddar News' Closing Bell to discuss the Fed news, as well as Q3 earnings season.
Both the S&P 500 and Nasdaq hit new highs Thursday, with investors keeping an eye on strong economic data, and tech stocks boosting the Nasdaq. The Dow closed lower, but hovered near a record. Brandon Pizzurro, Director of Public Investments at GuideStone Capital Management, joins Cheddar News' Closing Bell to discuss today's close, Q3 earnings season so far, and 2022 outlook amid Fed announcements.
The largest car search platform in India, Cardekho, recently raised $250 million in what the company calls a pre-IPO round led by leapfrog investments. The funding bumps CarDekho above unicorn status with a $1.2 billion valuation. The company currently has a catalogue of more than 3,000 pre-owned cars for online purchases and hopes to expand with the new funding. Partner and co-head of South Asian investment for LeapFrog Stewart Langdon joins Cheddar News' Closing Bell to discuss.
E-scooter company Bird made its public debut on the New York Stock Exchange on Thursday. CFO Yibo Ling joined Cheddar to discuss what made the company launch a SPAC IPO now. Ling noted one of the deciding factors was the need to scale the business to help take "gas-guzzling cars off the road" by growing into more locations. "A large portion of our proceeds will go to fund expansion into these new geographies," he said.
Booking Holdings CEO Glenn Fogel joined Cheddar's "Closing Bell" to discuss the online travel company's Q3 earnings beat and the state of the travel industry. The earnings win was a sign that a sense of normalcy is slowly returning, according to Fogel, though he expressed disappointment in the Biden administration's delay allowing international vaccinated travelers into the country. He also predicted that elevated prices in areas like room bookings will remain high as travelers continue to pay more even as occupancy rates remain low.
Fintech firm NerdWallet made its IPO debut on the Nasdaq on Thursday. CEO Tim Chen joined Cheddar to talk about the decision to tap the capital markets now and explained the company's revenue model by taking a cut from financial products like credit cards and loans sold through the site. Chen also talked about the firm's stance on cryptocurrencies, noting it advises people to only invest what they can afford to lose. (Updated November 5, 2021 to reflect that NerdWallet went public on Nasdaq, not NYSE.)
New York City taxi drivers won a major victory to slash the cost of money owed for taxi medallions. The announcement follows a two-week long hunger strike at City Hall by some drivers to demand debt relief.
Moderna reported a massive miss on revenue in its Q3 earnings, taking in $5 billion versus the expected $6.21 billion despite sales of the COVID-19 vaccine. The pharmaceutical giant's stock dropped sharply on the news.
Joan E. Solsman, a senior reporter at CNET, joined Cheddar's "Opening Bell" to talk about Netflix moving to offer mobile video games for Android users as part of their subscription. She said this is likely one "baby step" for the streaming giant as it moves into the space. "You can see what Netflix wants to do eventually down the line is have these great ambitions to make their service be more than just passive TV, movies," she said. "They're moving more into merchandising, that they're moving more into in-person experiences. They're trying to broaden a way, which is a great thing to do when everyone keeps talking about metaverses."
CVS is working to become a major health care provider as the pharmacy chain adds doctors to its payroll, following a trend among pharmacies like Walgreens integrating more primary health care services.
