In addition to the action against Coinbase, the SEC has also filed 13 charges against Binance, a leading cryptocurrency exchange, and its CEO Changpeng Zhao. The agency alleges that Binance circumvented its own compliance measures and misled investors and regulators. The SEC also accused Coinbase of mishandling customer funds. Furthermore, the agency is involved in the government’s case against Sam Bankman-Fried, the founder and former CEO of FTX.
Coinbase is also facing regulatory scrutiny at the state level. A task force composed of state regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin issued a Show Cause Order against the exchange. The Alabama Securities Commission accused Coinbase of violating securities laws by offering its staking rewards program accounts to Alabama residents without proper registration. The company has been given 28 days to show cause as to why it should not be ordered to cease and desist from selling unregistered securities in the state.
