According to the SEC’s complaint, since at least 2019, Coinbase "has made billions of dollars unlawfully" through the buying and selling of crypto asset securities. The SEC alleges that Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the Commission as required by law. As alleged in the SEC’s complaint, Coinbase’s failure to register has deprived investors of significant protections, including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest, among others. The regulator also slammed Coinbase for failing to register its staking-as-a-service program as required by the securities laws. "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,” says Gurbir S. Grewal, director of the SEC’s Division of Enforcement. "As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them. While Coinbase’s calculated decisions may have allowed it to earn billions, it’s done so at the expense of investors by depriving them of the protections to which they are entitled. Today’s action seeks to hold Coinbase accountable for its choices.”

In April, Coinbase filed a suit against the Securities and Exchange Commission, asking a court to make the regulator respond to a petition from last year on the "rules to govern the regulation" of digital assets. The crypto behemoth has also flirted with the idea of moving its HQ out of the US over frustration with the regulatory regime. The SEC’s complaint, filed in US District Court for the Southern District of New York, seeks injunctive relief, disgorgement of ill-gotten gains plus interest, penalties, and other equitable relief. The action is the latest in a series of crackdowns by the watchdog following the demise of FTX. Yesterday, the SEC sued Binance and CEO Changpeng Zhao, alleging a host of securities law violations and accusing the world’s largest crypto exchange of engaging in an "extensive web of deception".