The Securities and Exchange Commission (SEC) continued its crackdown on the digital asset industry Tuesday, charging cryptocurrency exchange Coinbase with violating federal securities laws.

The allegations against Coinbase, which are largely similar to charges levied against Binance by the SEC on Monday, include operating an unregistered securities exchange, broker, and clearing agency and the unregistered offer and sale of securities in connection with a staking-as-a-service program, the SEC said in a press release.

The agency is seeking injunctive relief, disgorgement of ill-gotten gains plus interest, penalties, and other equitable relief as part of its litigation.

The details: Since at least 2019, Coinbase has facilitated trading of crypto asset securities without necessary registrations, generating “billions of dollars in revenues by, among other things, collecting transaction fees from investors,” according to the SEC’s complaint, filed in U.S. District Court for the Southern District of New York.

The agency noted depriving investors of SEC oversight, recordkeeping requirements, and conflict-of-interest safeguards exposes them to “significant risk.”

During the same period, the SEC said Coinbase operated an unregistered broker through two other services: Coinbase Prime and Coinbase Wallet. Coinbase’s holding company, Coinbase Global, is a control person and thus also liable for certain violations, the agency said.

Further, Coinbase failed to register its staking-as-a-service program, which allowed customers to earn profits from blockchain transaction validation services, the SEC said.

The charges came the same day Coinbase’s Chief Legal Officer Paul Grewal testified before the House Committee on Agriculture. His testimony centered around three points:

  1. The United States is falling behind and pushing the crypto industry overseas “due to lack of clear rules and regulations.”
  2. Crypto is solving real-world problems and needs a clear path forward to protect “responsible innovation.”
  3. The “Digital Asset Market Structure Discussion Draft” announced last week is a step forward in providing “overdue regulatory clarity.”

Company response: “The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance,” Grewal said in an emailed statement. “The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation.”

Coinbase on Tuesday was also issued a show-cause order by a coalition of 10 state securities regulators, including Alabama, to demonstrate why it should not be ordered to cease and desist offering its staking program alleged to violate securities laws.