The U.S. Securities and Exchange Commission announced the filing of charges against Coinbase for operating without required registrations as a securities exchange, broker and cleaning agency.

The complaint alleges Coinbase facilitated the buying and selling of crypto asset securities without proper registration, offering exchange, broker and clearing services since 2019, according to a June 6 news release. This failure to register has denied investors the necessary protections, including SEC oversight and safeguards against conflicts of interest.

"You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” SEC Director of Enforcement Gurbir S. Grewal said in the release. "As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them."

Additionally, the SEC charged Coinbase for conducting an unregistered securities offering through its staking-as-a-service program, where customers earned profits from blockchain transaction validation services, the release reported. Coinbase is accused of pooling customers' stakeable assets and distributing rewards without the required registration.

The SEC's investigation involved the collaboration of the Division of Enforcement's Crypto Assets and Cyber Unit, assisted by the San Francisco Regional Office, according to the release. State securities regulators from 10 states, led by California, also provided assistance to the SEC in this case. 

Coinbase and its holding company, Coinbase Global Inc., are both named as defendants, accused of violating registration provisions under the Securities Exchange Act of 1934 and the securities offering registration provisions of the Securities Act of 1933, the release said. The SEC's litigation will be conducted by a team of attorneys supervised by various division directors.

"While Coinbase’s calculated decisions may have allowed it to earn billions, it’s done so at the expense of investors by depriving them of the protections to which they are entitled," Grewal added, according to the release. "Today’s action seeks to hold Coinbase accountable for its choices.”