Crypto stocks fall after US SEC sues Coinbase over failure to register

By Manya Saini and Sinéad Carew

(Reuters) -Shares of cryptocurrency and blockchain-related companies fell in premarket trading on Tuesday after the industry’s biggest exchanges Coinbase (NASDAQ:) Global and Binance found themselves in the crosshairs of the U.S. securities regulator.

The U.S. Securities and Exchange Commission sued Coinbase, accusing it of illegally operating without registration with the regulator. This was a day after the SEC had filed a lawsuit against Binance and its CEO, Changpeng Zhao.

In a complaint filed in Manhattan federal court on Tuesday, the SEC said Coinbase has since at least 2019 operated as an unregistered broker by handling cryptocurrency transactions, evading the disclosure requirements meant to protect investors.

Coinbase shares were down 13.8% . The news also helped drag down Blockchain farm operator Bitfarms 0.4%.

Crypto miners= Riot Platforms was down 1.0% while Marathon Digital dropped-0.8% and Hut 8 Mining fell2.2%.

After falling earlier, , the world’s biggest cryptocurrency was up 1.5%. Binance’s cryptocurrency was up 0.67% after falling 9.2% on Monday.

Global regulators have been keeping a close watch on the crypto world after a string of high-profile collapses wiped out more than a trillion dollars from the digital assets industry’s market capitalization last year.

Coinbase had disclosed in March that it received a ‘Wells notice’ from the SEC threatening a potential lawsuit over certain products.

On Tuesday, Coinbase chief legal officer and general counsel Paul Grewal issued a statement saying the “SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance.”

“The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual,” said Grewal.