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Coinbase Stocks Drop After Reports That They Are Facing SEC Investigation


People view the logo of Coinbase Global Inc, the largest U.S. cryptocurrency exchange, displayed on the Nasdaq MarketSite jumbotron at Times Square in New York, U.S., April 14, 2021.

Shannon Stapleton | Reuters

Shares of Coinbase fell more than 13% on Tuesday due to reports that it is facing an SEC investigation into whether the platform offers unregistered securities.

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

The U.S. Securities and Exchange Commission is scrutinizing whether the company allows users to illegally trade digital assets that aren’t registered as securities, CNBC confirmed to a press release. information resource. Previous News reported by Bloomberg.

Coinbase Chief Legal Officer Paul Grewal said: “I am happy to say it over and over again: we are confident that our rigorous due diligence process – one that the SEC has reviewed – keeps securities securities are not part of our platform. on Twitter. “We look forward to engaging with the SEC on this matter.”

This SEC probe is believed to have happened before and is separate from Coinbase’s alleged insider trading scheme that resulted in fraud fees against a former Coinbase product manager and two others last Thursday. But the SEC also filed a complaint the same day, claiming that 9 of the 25 tokens allegedly traded in the scheme were securities.

Arguments about how crypto tokens should be classified are controversial. Generally, if cryptocurrencies are commodities (like other currencies), they will be regulated by the Commodity Futures Trading Commission. But many crypto projects funded by the sale of tokens of primary value are speculative. SEC Chairman Gary Gensler stated that “many of these underlying tokens have the properties of securities” and should be regulated as such to protect investors.

In the agency’s recent lawsuit against the alleged insider trading scheme, the SEC wrote, “A digital token or crypto-asset is a secure crypto-asset if it meets the definition of a security, which the Securities Act defines to include an ‘investment contract’, i.e., if it constitutes an investment of money, in an ordinary enterprise, with a reasonable expectation of return profit from the efforts of others.”

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

Compared to Binance and FTX, Coinbase is more selective with its token list. Coinbase Lists Over 200 Such Tokens, According to CoinGecko Data.





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