Coinbase, a crypto trading platform, is being accused by the U.S. SEC of acting as an unregistered stock exchange and broker.

The SEC accuses the crypto platform of failing to register as a stock exchange, thus failing to provide important protections such as SEC inspections, recordkeeping, and safeguards. It also alleges that they illegally operated a staking-as-a-service program to enable them to profit from proof-of-stake algorithms common to several major cryptocurrencies.

In its 101-page complaint, the SEC alleges that Coinbase "made a calculated business decision to make crypto assets tradable in order to increase its own revenue, which is primarily derived from transaction fees from customers.

Whether cryptocurrencies fall under the umbrella of securities, i.e., whether they are, in a sense, similar to corporate stocks, has been heavily debated over the years. More recently, however, there is an SEC understanding that if virtual currency is offered as an "investment contract," it falls under the securities category and is subject to SEC oversight.

The complaint names a handful of cryptocurrencies, including an AXS token that is the currency for a blockchain game called Axie Infinity and has a digital pet called "Axies" The SEC appears to have a special interest in this collection of furballs.

"Since at least 2016, Coinbase has understood that the Supreme Court decision in SEC v. W.J. Howey Co. 328 U.S. 293 (1946) and its progeny set forth the relevant test for determining whether crypto assets are part of investment contracts subject to securities laws."

"However, Coinbase, while paying lip service to its desire to comply with applicable law, has for years allowed crypto assets that are investment contracts to trade under the Howey test and the established principles of the federal securities laws.

That has gotten the company into a heated battle with the SEC, which has found that the company "ignored the regulatory structure and circumvented the disclosure requirements that Congress and the SEC have constructed to protect the national securities markets and investors."

And this is only the first complaint; the SEC also claims that Coinbase's staking program violated its rules and regulations.

"Through this staking program, Coinbase pooled its customers' stakable crypto assets by type, staked the pool to perform blockchain transaction verification services, and made a portion of the compensation generated from this work available to customers whose assets were part of the pool as Coinbase did not register to offer and sell this staking program, as required by law.

Coinbase was warned by the SEC in March of a possible lawsuit, to which it responded, "We asked the SEC for reasonable crypto rules for Americans. We received legal threats instead.

There is no love affair with Coinbase in the press release of the charges against it either.

"You cannot ignore rules because you don't like them or because you prefer different rules.

The accusations come a day after similar charges were filed by the SEC against major cryptocurrency exchange Binance.

Bitcoin and Ethereum saw sharp price declines today, with Coinbase's stock plunging 18% at the time of writing.

Coinbase CEO Brian Armstrong said the company intends to fight the SEC on the charges in order to "finally get some clarity on the rules of crypto." "

Armstrong said the case against it is built entirely around what is and what is not a security, suggesting that Coinbase intends to argue whether what the SEC currently classifies as a security will withstand scrutiny.The SEC has stated that "SEC v. W . the Supreme Court's decision in J. Howey Co. v. W. J. Howey, 328 U.S. 293 (1946), and its progeny, set forth the relevant test for determining whether crypto assets are part of an investment contract subject to regulation under the securities laws."