The Securities and Exchange Commission (SEC) is suing U.S. cryptocurrency exchange Coinbase Inc., accusing it of operating as an unregistered broker.

Shares tumbled on the development along with Bitcoin which is trading down around the $25,000 level. 

In the complaint filed in Manhattan federal court, the SEC said that since at least 2019 Coinbase has pocketed billions of dollars by collecting transaction fees from investors without the disclosures and protections of registration, exposing its customers to risk. Because of its failure to register, Coinbase "has for years defied the regulatory structures and evaded the disclosure requirements that Congress and the SEC have constructed for the protection of the national securities markets and investors," the complaint said.

"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 in a tweet.

The SEC has also filed complaints against other foreign crypto companies for being unregulated securities exchanges, and U.S. firms for their staking products and pushing customers to earn interest on their crypto.

The lawsuit filed Tuesday comes one day after the regulator sued crypto exchange Binance and its founder Changpeng Zhao.

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