"Since at least 2019, Coinbase has made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities," said the U.S. Securities and Exchange Commission in a statement on Tuesday.
In filing a complaint in federal court, the SEC said Coinbase's failure to register "has deprived investors of significant protections, including inspection by the SEC, record-keeping requirements, and safeguards against conflicts of interest, among others," the U.S. agency added.
In the absence of congressional action, the U.S. regulator has stepped up its oversight of cryptocurrency.
The SEC said Coinbase's "staking-as-a-service" program should have been registered as a securities offering.
Under the program, Coinbase pools customers' crypto assets, uses the assets to perform blockchain transaction validation services and provides a portion of the rewards back to customers.
"Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them," said SEC director of enforcement, Gurbir Grewal.
"While Coinbase's calculated decisions may have allowed it to earn billions, it's done so at the expense of investors by depriving them of the protections to which they are entitled," Grewal added.
A Coinbase spokesperson said the company had no immediate comment on the SEC action.
The complaint comes on the heels of Securities and Exchange Commission (SEC) charges filed Monday against cryptocurrency exchange Binance and founder Changpeng Zhao for numerous securities law violations, including running an unregistered national securities exchange.