The SEC filed a lawsuit against Coinbase, the largest crypto exchange in the US, for operating as an unregistered securities exchange, broker, and clearing agency. The SEC also accused Coinbase of offering and selling unregistered securities through its staking program.
The lawsuit was announced on June 6, the same day that ARK Invest, a leading investment firm, increased its stake in Coinbase by buying about 419,000 shares worth around $21.6 million. ARK Invest is known for its bullish outlook on crypto and innovation.
This occurred after the recent lawsuit news and the current SEC action, which caused Coinbase stock to drop more than 20% on June 6. The price of Coinbase’s shares is at $53.11 at the time of writing.
The inclusion of Coinbase stocks in the portfolio of ARK Invest continues a pattern. On May 2, a little over a month earlier, ARK Invest added an additional 168,869 Coinbase shares, for a total transaction value of about $8.5 million. The company invested in 2.4 million shares in March for roughly $117 million and 304,300 shares in April for around $17.5 million, respectively.
Coinbase, the Crypto Exchange, Responds to the Accusations
Coinbase’s CEO Brian Armstrong defended his company on Twitter and said he was confident in their facts and the law. He also said he looked forward to getting some clarity around crypto rules in court.
Regarding the SEC complaint against us today, we're proud to represent the industry in court to finally get some clarity around crypto rules.
1. The SEC reviewed our business and allowed us to become a public company in 2021.
2. There is no path to "come in and…
— Brian Armstrong 🛡️ (@brian_armstrong) June 6, 2023
Coinbase’s chief legal officer Paul Grewal told Congress on June 6 that Coinbase has always embraced regulation and that it met with the SEC 30 times in 2022 for guidance.
Coinbase also faces a Show Cause Order from a group of state security regulators who allege that its staking program is illegal. The order was issued on June 6 by regulators from states such as Alabama, California, Illinois, and Vermont.
The SEC’s lawsuit could have a major impact on the crypto industry and its regulation. The SEC argues that many crypto assets are securities and should be subject to its oversight. Coinbase disagrees and says that crypto assets are not securities and should not be regulated by the SEC.