SEC Sues Huobi CEO and Warns of Possible Coinbase Lawsuit

SEC Sues Huobi CEO and Warns of Possible Coinbase Lawsuit

The US Securities and Exchange Commission (SEC) filed a lawsuit against the head of the Huobi crypto exchange and the founder of the TRON blockchain, Justin Sun, and sent a notice to Coinbase officially announcing the regulator’s plans to file a lawsuit against this exchange.

The SEC has charged Justin Sun and his three companies — Tron Foundation, BitTorrent Foundation, and Rainberry (the developer of the BitTorrent protocol) — with an unregistered offering and sale of securities in the form of Tronix (TRX) and BitTorrent (BTT) cryptocurrencies. In addition, the regulator alleges that Sun and his companies fraudulently manipulated the prices of TRX tokens. The SEC also indicted eight celebrities, including actress Lindsay Lohan and blogger Jake Paul, for illegally promoting TRX and BTT without proper disclosure.

Justin Sun commented on the SEC lawsuit on social media. He wrote that the agency’s complaint is unfounded and its ecosystem will continue to “build the most decentralized financial system.”

According to him, the TRON ecosystem seeks to cooperate with the authorities of different countries, including regulators who are trying to establish transparent guidelines for regulating and working with the cryptocurrency industry. As an example, Sun cited the Commonwealth of Dominica, an island nation where TRX and BTT tokens were recently recognized as legal tender.

Against the backdrop of the news about the SEC lawsuit against Sun, cryptocurrencies associated with his projects fell in price: the exchange rate of the native token of the Huobi (HT) exchange decreased by 8.5% per day, to $3.7, the price of TRX dropped by 7.2%, to $0 .06, BitTorrent – by 0.8%, to $0.00000062.

Following the news of the SEC claims against the head of Huobi, Coinbase exchange reported that it received a warning from the regulator that the SEC plans to take enforcement action against her in connection with possible violations of securities laws. The warning applies to an unspecified portion of the digital assets listed on Coinbase, as well as its Coinbase Earn, Coinbase Prime, and Coinbase Wallet services.

Coinbase has stated that it is confident in the legality of the tokens and services listed on the platform and will “welcome” litigation if necessary to ensure clarity on the regulation it advocates and demonstrate that “the SEC is not being fair or reasonable when it comes to to digital assets. The exchange team noted that they will not change anything in their products or services now. Coinbase shares lost 8.16% in a day.

The exchange said in a statement that its representatives have met with the SEC more than 30 times in the past nine months and have spent millions of dollars on lawyers to somehow try to officially register. However, the regulator has never explained how this can be done, and did not respond to requests from the exchange.

In December 2022, Coinbase again approached the SEC for feedback on its proposals for the registry issue. The SEC agreed, but the day before the meeting scheduled for January 2023, they canceled it and announced that they intended to conduct a mandatory investigation.

In February, the Kraken exchange, at the request of the SEC, agreed to close the staking program for US customers and pay a $30 million fine. In early March, the New York Attorney General filed a lawsuit against the KuCoin exchange, demanding that it be banned from providing services in the region.

On March 21, the decentralized exchange SushiSwap and its head Jared Gray received a subpoena from the US Securities and Exchange Commission. A post on the DAO forum states that they are cooperating with the regulator but will not publicly comment on these matters.

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