Coinbase (COIN) stock sank nearly 15% in midday trading on Tuesday as the Securities and Exchange Commission sued the crypto exchange, alleging that it acted as an unregistered exchange and broker.

The SEC alleged in a lawsuit filed in federal court that the crypto firm broke securities law by not registering with the SEC before operating in the US. Specifically, the SEC states Coinbase acted as an exchange, a broker, and a clearing agency, without registering with the agency.

"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 Chair Gary Gensler said in a statement.

Coinbase, the largest crypto asset trading platform in the US, held more than $130 billion in assets on its platform as of March 31, according to the company.

“The SEC's reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance. The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual,” Paul Grewal, Chief Legal Officer and General Counsel

Tuesday's SEC complaint comes a day after the SEC filed a lawsuit against Binance Holdings, the world's largest crypto exchange. That lawsuit claimed similar infractions of Binance including that the crypto trading platform failed to register as an exchange, broker, or clearing agency.

The crypto space has been in turmoil since the collapse of FTX late last year. The popular crypto exchange, once valued at $32 billion, unraveled throughout fall 2022 as a growing number of details of alleged fraudulent activity were revealed. FTX's former CEO Sam Bankman-Fried now faces criminal charges that he allegedly stole billions of FTX customer funds and misled investors.