SEC Probes Coinbase Over Crypto Trading

According to reports, the Securities and Exchange Commission is looking into Coinbase Global Inc. to determine if it permitted the trading of unregistered securities.

On Monday, Bloomberg News reported that since Coinbase raised the amount of digital tokens it allows for trading, regulatory monitoring has escalated. As per the article, the investigation was conducted before a former Coinbase manager was indicted last week in a different investigation into alleged insider trading.

The SEC says that some cryptocurrencies sold by Coinbase are securities, while the company argues that they are not. This basic conflict appears to be at the core of both issues. The SEC said last week that nine digital assets exchanged by Coinbase are in fact securities.

Last Monday, Coinbase Chief Legal Officer Paul Grewal issued a statement that summed up the situation. He said that securities are not listed on Coinbase.

Grewal reaffirmed that on Monday evening. He stated in a statement, “We are confident that our rigorous diligence process — a process the SEC has already reviewed — keeps securities off our platform, and we look forward to engaging with the SEC on the matter.” 

Over 150 digital tokens, many of which are much less popular than cryptocurrencies like bitcoin and ethereum, are traded on Coinbase. Bloomberg claims that Coinbase would have to register as an exchange with the SEC if the tokens were to be deemed securities.

In comparison to the S&P 500’s SPX, -1.15 % 17 % decrease in 2022, the price of Coinbase shares COIN, -21.08 % has fallen by nearly 73 % year to date as the larger crypto market has collapsed.

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