September 26, 2022

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Coinbase shares falter after reporting it faces SEC investigation

Coinbase shares falter after reporting it faces SEC investigation

People watch the logo of Coinbase Global Inc, the largest cryptocurrency exchange in the United States, displayed on the Nasdaq MarketSite jumbotron in Times Square in New York, US, April 14, 2021.

Shannon Stapleton | Reuters

shares Queen Piece It fell more than 15% on Tuesday after reports that it is facing an investigation by the Securities and Exchange Commission over whether the platform is offering unregistered securities.

Coinbase stock has lost more than 77% of its value this year.

The US Securities and Exchange Commission is examining whether the company is illegally allowing users to trade digital assets that are not registered as securities, CNBC confirmed with a source. The news was earlier Reported by Bloomberg.

“I am happy to say this time and time again: We are confident that our stringent due diligence process – a process reviewed by the SEC – keeps securities out of our platform,” said Paul Grewal, Coinbase’s chief legal officer. on Twitter. “We look forward to engaging with the Securities and Exchange Commission on this.”

This SEC investigation has reportedly happened before and was separate from the alleged Coinbase insider trading scheme that led to fraud fee Against a former Coinbase product manager and two other people on Thursday. But the SEC also filed a complaint the same day, alleging that nine of the 25 tokens allegedly circulating in the system were securities.

The debate over how cryptocurrency tokens are classified is controversial. Generally speaking, if cryptocurrencies are commodities (like other types of currencies), they will be governed by the CFTC. But many crypto projects are funded by selling tokens whose main value is speculation. SEC . chair Gary Gensler He said that “many of these tokens have the attributes of securities” and need to be regulated as such to protect investors.

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In the agency’s recent lawsuit against the alleged insider trading scheme, the SEC wrote, “A digital token or crypto asset is the security of a crypto-asset if it meets the definition of securities, which the Securities Act defines as an “investment contract,” that is, If it represents an investment of money, in a joint venture, with a reasonable expectation of profits from the efforts of others.”

Other crypto companies, such as San Francisco-based Ripple, are also fighting lawsuits from the SEC.

Compared to Binance and FTX, Coinbase is more selective with its token listings. Coinbase lists over 200 of these tokens, according to CoinGecko data.