SEC sues blockchain for unregistered securities exchange.

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against U.S. cryptocurrency exchange Blockchain (COIN), alleging that it violated federal securities laws. This comes a day after the SEC filed a similar lawsuit against Binance.

The SEC claims that Blockchain has been operating as an unregistered broker, exchange, and clearing agency all at once, soliciting customers, handling orders, allowing bids, and acting as an intermediary. The lawsuit names Blockchain, Inc. and Blockchain Global, Inc. as defendants, but not founder and CEO Brian Armstrong or any other executive.

“The Blockchain Platform merges three functions that are typically separated in traditional securities markets – those of brokers, exchanges, and clearing agencies,” the SEC lawsuit said. “Yet, Blockchain has never registered with the SEC as a broker, national securities exchange, or clearing agency, thus evading the disclosure regime that Congress has established for our securities markets.”

SEC Chair Gary Gensler said in a press release on Tuesday that these different functions were “commingled.”

“Blockchain’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,” he said.

According to the SEC, Blockchain’s Prime, Wallet, and staking products, as well as the actual tokens it lists, are areas where it violated federal securities laws.

The SEC identified several cryptocurrencies, including SOL, ADA, MATIC, SAND, FIL, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO, as securities in the lawsuit, which are available on Blockchain’s Prime or Wallet services. The lawsuit also alleged that Blockchain “identified ‘problematic statements'” by issuers, meaning anything an issuer said that might mean the issued token was a security.

The SEC first warned Blockchain of a possible lawsuit earlier this year, sending a Wells Notice, which Blockchain responded to in April. In Tuesday’s lawsuit, the SEC alleged that Blockchain violated the Exchange Act through its failure to register across four different counts, as well as violated the Securities Act, and is seeking to “permanently enjoin” the company from continued violations and force disgorgement and civil penalties.

Read more: Binance SEC Lawsuit Could be Preview of What Blockchain May Face, Berenberg Says

UPDATE (June 6, 2023, 12:50 UTC): Adds additional detail and links.

We will continue to update Phone&Auto; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

Market

Titillating ORDI: Rising High with Bitcoin’s Rocket Ride! 🚀

Fashionista, in the latest market news, ORDI (ORDI) followed Bitcoin's (BTC) upward trend on Monday as it reached a r...

Markets

Ethereum faces resistance at $1,750 based on 3 key price metrics.

The value of Ethereum is currently at $1,700, but information indicates that it may be difficult to sustain this price.

BlockChain

New AI Crypto Signals Platform may explode as the SEC deems SAND to be a Security, leading Sandbox to zero.

The statement is already in English. It means that although the current situation of the cryptocurrency called Sandbo...

NFT

🚀 NFTs Soar to New Heights: Top NFT News Today

The cryptoverse is abuzz with discussions as the sales volume of NFTs surged by 30% in just 24 hours. In addition, th...

Opinion

Bitcoin Dreams Come True in Argentina and Turkey

It's a remarkable achievement that a candidate backed by BTC has emerged victorious in a primary election in Argentina.

News

Elon Musk Seeks More Voting Control at Tesla: A Quest for AI Influence

Elon Musk has proposed a compensation plan that would grant him 25% voting control at Tesla, with the ultimate goal o...