Coinbase Under Investigation Over Alleged Securities

• SEC is investigating Coinbase for allowing US citizens to trade unregistered securities.
• Coinbase’s stock dropped more than 21% in response to this story.
• Coinbase has asked the Securities and Exchange Commission (SEC) to develop new regulations for the cryptocurrency securities market.

The risk-off sentiment kicks in the market amid the news “Coinbase Under Investigation.” The Securities and Exchange Commission (SEC) is investigating Coinbase (a cryptocurrency company) for allowing US citizens to trade unregistered securities. According to people familiar with the situation, the popular cryptocurrency exchange Coinbase is the subject of a new SEC investigation. SEC examines whether it allowed Americans to trade digital assets that should have been registered as securities.

Coinbase, the largest US trading platform, allows Americans to exchange over 150 tokens. If those products were deemed securities, the company might have to register with the SEC as an exchange. Coinbase shares plunged $14.14 to $52.93 in New York, bringing the stock’s year-to-date loss to 79%.

Coinbase has frequently clashed with the SEC over how it regulates the industry. During the last week, the company urged the SEC to propose clearer rules. Meanwhile, Coinbase has increased its token offers after taking a conservative approach for several years.

Coinbase Under Investigation – Shares Drops 21%

Coinbase’s stock dropped more than 21% in response to this story. This year, Coinbase shares have dropped by more than 75%. This incident occurred shortly after the SEC and Department of Justice jointly charged a former Coinbase employee and two of his acquaintances with insider trading. 

According to the SEC’s court filing, Coinbase named “at least nine” crypto assets that could be considered securities. Reinforcing Gary Gensler’s, the agency’s chairman, repeated warnings over the last year. Since Coinbase started offering a wider range of crypto tokens for trade, the Securities and Exchange Commission (SEC) has closely monitored the company.

Furthermore, Coinbase is currently facing criticism from the industry for its questionable asset listing process. While insider trading allegations are another embarrassment, Cobie and other well-known crypto professionals have criticized Coinbase’s choice of supported assets.

Coinbase’s Self-Defense

Coinbase has consistently defended its decisions by publishing a new blog post denying any assets traded on the exchange should be classified as securities. On July 21, the company’s chief legal officer, Paul Grewal, published a blog post titled “Coinbase does not list securities.” On the same day, the company published a separate blog post urging the SEC to reconsider how it determines whether an asset qualifies as a security.

Coinbase has asked the Securities and Exchange Commission (SEC) to develop new regulations for the cryptocurrency securities market. They claimed that the current US securities law is inadequate for managing digital assets.

As a result, Coinbase’s stock fell by 21%, while Coinbase tokenized stock FTX (COIN) was down 10% at the time of writing. But, whereas the downward trend continues as investors seem panicked, they will look for further developments before placing further bets on COIN.