Coinbase plunges 21% after the SEC sues the crypto exchange for breaking US securities laws

• Coinbase stock plunged 21% on Tuesday after the SEC sued the company and alleged it operates as an unregistered exchange.
• The lawsuit comes one day after the SEC sued Binance for running an unregistered crypto exchange.
• "Coinbase's alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation," SEC chairman Gary Gensler said.

Coinbase stock plunged as much as 21% on Tuesday after the SEC sued the company for operating an unregistered crypto exchange and offering unregistered securities to its users.

Shares were trading at $47.97 at 9:42 a.m. ET. The stock fell 9% a day before following the announcement of the SEC's suit against Binance.

The enforcement action comes one day after the SEC sued Binance for also running an unregistered crypto exchange and offering unregistered securities to investors.

Coinbase was also sued for its staking yield program, which the SEC alleged is an unregistered sale and offering of securities to its users.

"Coinbase's alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC," SEC Chairman Gary Gensler said.

Coinbase has been under investigation by the SEC for months, and it received a Wells notice from the agency in March suggesting that an enforcement action was imminent.

Other crypto stocks sold off on Tuesday, including MicroStrategy and Riot Platforms. Meanwhile, crypto tokens like bitcoin and ether also sold off by about 1%.