The Securities and Exchange Commission filed a complaing against Coinbase on Tuesday in U.S. District Court in New York, accusing it of operating an unauthorized crypto exchange. File Photo by John Angelillo/UPI | License Photo
June 6 (UPI) -- The Securities and Exchange Commission filed a complaint against Coinbase on Tuesday, accusing the firm of operating an unauthorized cryptocurrency exchange.
The SEC's complaint, filed in U.S. District Court for the Southern District of New York, accuses the firm of "unlawfully facilitating the buying and selling of crypto asset securities," intertwining "the traditional services of an exchange, broker and clearing agency without having registered any of those functions with the commission as required by law."
By failing to compartmentalize functions that should normally be separate, the SEC said Coinbase failed to protect its customers.
"Coinbase's alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest and routine inspection by the SEC," SEC Chairman Gary Gensler said in a press release.
In February, a former Coinbase manager, Ishan Wahi, pleaded guilty to insider trading, admitting that he gave confidential information about cryptocurrencies to his brother Nikhil Wahi.
The SEC has taken multiple actions against cryptocurrency firms in recent months.
In January, Sam Bankman-Fried pleaded not guilty to charges including wire fraud, conspiracy by misusing customer funds and conspiracy to commit money laundering in the collapse of his FTX crypto exchange and hedge fund Alameda Research.
On Monday, the SEC sued the cryptocurrency trader Binance and its founder Changpeng Zhao for operating unregistered exchanges.