The US has charged the biggest crypto trading platform in the country with operating illegally, widening its crackdown on the industry.

The Securities and Exchange Commission said Coinbase had acted as a broker, exchange and clearing agency for investments that are subject to SEC rules, without properly registering.

The regulator said that allowed the firm to escape oversight, including guards against conflicts of interest.

Coinbase did not comment immediately.

In March, the company had warned that the SEC might take legal action against the firm, which claims more than 100 million customers in the US and accounts of billions of dollars worth in trading volumes of digital assets such as Bitcoin each day.

It called the development disappointing and said it had been working with authorities to try to register, but that there was no clear path for crypto firms to do so.

The complaint against Coinbase comes a day after the SEC sued Binance, the world's largest crypto trading platform, accusing the firm of mishandling customer funds, artificially inflating trading volume on the site and taking steps to evade US regulation.

Binance, Coinbase and some others in the industry have criticised the moves, maintaining that the rules governing digital assets are unclear.

But authorities have said crypto assets function like other investments and have pledged to police the industry more aggressively using existing laws.

That scrutiny increased last year after the dramatic collapse of another major exchange, FTX, left many customers unable to access their funds.

"As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them," said Gurbir S Grewal, director of the SEC's division of enforcement.

"You simply can't ignore the rules because you don't like them or because you'd prefer different ones: the consequences for the investing public are far too great."

Founded in 2012, Coinbase has seen its market value plunge since 2021, when it listed on the stock market at the height of the crypto frenzy, fetching a market value of nearly $100bn. It is now worth less than $12bn.

Shares in the firm sank more than 14% on news of the lawsuit, which was filed in federal court in New York.