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.
Dave Gray, the head of workplace retirement offerings and platforms at Fidelity Investments, dives into the financial services company's newest initiative to allow investors to allocate up to 20 percent of their savings to Bitcoin. He also discussed some of the educational opportunities Fidelity is providing when it comes to crypto."What we've created here is really a first of its kind account that can be in a workplace 401(k) plan that employers can make available to their employees that allow them to defer money from their paycheck in the account or transfer money from a mutual fund in the account or from that Bitcoin account into a mutual fund," he said.
Dr. Michael Bottlang and Dr. Steve Madey, co-founders of WaveCel, join Cheddar Innovates to share their breakthrough in hard hat design that could have ramifications for protecting against head trauma across industries.
Melissa Snover, Founder & CEO of Nourished, joins Cheddar Innovates to discuss her one-of-a-kind business that offers customizable, 3D printed vitamins that offer less hassle, cost, and waste than traditional vitamins.
Stocks closed higher Thursday as investors focused on big tech earnings, including a strong report from Facebook parent company Meta. The movement was largely led higher by the tech sector, and the Nasdaq saw gains after recent volatility. However, the index is still on pace for its worst month since March 2020. Stuart Kaiser, Head of Global Equity Derivatives Research at UBS, joins Closing Bell to discuss today's close, the Federal Reserve's plan to tackle inflation, and more.
Mental health platform Real recently raised $37 million in a Series B round led by Owl Ventures. Through its mobile app, Real says it provides mental health care at a lower cost than traditional therapy and aims to make mental wellness a part of everyone's daily routine. The company also announced that U.S. soccer star Megan Rapinoe will serve as an adviser to the company. Ariela Safira, Founder & CEO of Real, joins Cheddar News' Closing Bell to discuss.
It’s NFL draft night! A former defensive end for the Dolphins, Bears, and Texans Wale Ogunleye joined Cheddar News to talk about which rookies-to-be the NFL teams will be picking and also discuss the impact of the pandemic on the incoming players. "I do think having the ability to stay at school maybe a year or two longer, and it may be getting your adulthood going, it might help out a lot, but again, it's a different animal in that locker room," he said. Ogunleye, who also heads sports and entertainment at the financial firm UBS, also talked about providing financial literacy education and advice for young athletes.
Overstock.com CEO Jonathan Johnson joined Cheddar News to discuss the company's Q1 earnings miss as the internet retailer saw a 19 percent drop in sales since 2019. "Consumer sentiment got pretty soft. Despite that we were able to manage expenses, make money beat on the bottom line," he said regarding headwinds like inflation, gas prices, and the war in Ukraine. "But I think, look, e-commerce is here to stay. It's here to stay for the home space."
The all-women founders of the infused tequila brand 21Seeds Kat Hantas, Sarika Singh, and Nicole Emmanuel joined Cheddar News to talk about the recent acquisition of their company by the alcoholic beverage giant Diageo, gaining "world domination" in the tequila market, and enhancing Cinco de Mayo cocktails with their product. "If you want to lighten it up and you're looking for an RTD alternative, like one of those ready to drink alternatives, you can make that at home," said Hantas.
