Coinbase Argues That The SEC Is Off-Base With Crypto Enforcement Action

On June 6, 2023, the Securities and Exchange Commission (SEC) charged Coinbase, Inc. and Coinbase Global, Inc. (Coinbase) with violations of the Securities Exchange Act of 1934 ("Exchange Act") and the Securities Act of 1933 ("Securities Act"). Coinbase is the largest cryptocurrency exchange in the United States and has a market capitalization of roughly $24 billion. The SEC's 101-page complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Coinbase operates as an unregistered national securities exchange, broker, and clearing agency. The SEC further alleges that Coinbase failed to register the offer and sale of its crypto asset stakingas-a-service program under Section 5 of the Securities Act, and that the Coinbase Wallet and Coinbase Prime services offered by Coinbase constitute broker services under the federal securities laws.