SEC sues Coinbase for operating as unregistered broker; stock slumps

Coinbase Global ( NASDAQ: COIN ) stock tumbled 16% in Tuesday premarket trading after the U.S. Securities and Exchange Commission filed a lawsuit against the cryptocurrency exchange , alleging that it's operating as an unregistered securities broker. Bitcoin ( BTC-USD ) also slid after the news, falling 4.1% to $25.6K. As recently as April 17, the token had been trading at ~$30K. Ethereum ( ETH-USD ) slid 3.0% . Since at least 2019, Coinbase ( COIN ) has unlawfully facilitated the buying and selling of crypto asset securities, the SEC said, according to its complaint. The suit comes a day after the regulator sued Binance, the world's largest crypto exchange, and its CEO for allegedly violating U.S. securities regulations. "We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions," said SEC Chair Gary Gensler. "In other parts of our securities markets, these functions are separate." Crypto-related stocks dropped, too. MicroStrategy ( MSTR ) fell 3.0% ; Riot Platforms ( RIOT ) -5.9% ; Marathon Digital ( MARA ) -2.3% ; Hive Blockchain ( HIVE ) -2.6% . The SEC has long contended that most digital tokens qualify as securities rather than currency. In 2018, though, an SEC official had said that neither bitcoin ( BTC-USD ) nor ethereum ( ETH-USD ) are securities. More on Crypto Clampdown: Binance's Canada exit has been a boon for rival Kraken Canada's OSC probes Binance over whether the crypto exchange tried to skirt rules SEC asks court to reject Coinbase petition on crypto rulemaking SEC's Gensler defends crypto regulation at House oversight hearing