In a shocking turn of events, the Securities and Exchange Commission (SEC) has taken legal action against Coinbase, a major U.S. cryptocurrency exchange, less than 24 hours after filing a lawsuit against Binance. The SEC alleges that Coinbase evaded a disclosure scheme for securities markets and operated as an unregistered broker, a violation dating back to at least 2019.
Disturbingly, the regulator's lawsuit also claims that Coinbase sold unregistered securities, including the Cardano token, ADA, which was also implicated in the recent suit against Binance.
According to the SEC's filing, ADA is considered a security due to publicly disseminated information by Cardano, IOHK and Emurgo, particularly since the initial sale of ADA. The lawsuit argues that ADA holders, including those who acquired the Cardano token after March 2021, were led to view it as an investment in Cardano Foundation, IOHK and Emurgo. These holders expected to profit from the platform's development efforts, anticipating a subsequent surge in demand and value for their investment.
The news immediately impacted the Cardano token, causing a rapid decline in its price within minutes.
The repercussions were not limited to Cardano alone. Coinbase, a publicly traded company, experienced significant market turbulence as the news broke. Its shares, listed under the symbol COIN, plummeted by more than 15% in premarket trading on the American stock market.