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US SEC threatens to sue Coinbase over crypto products, shares drop 13%


US Securities and Exchange Commission (SEC) threatens to sue Coinbase Global on several crypto exchange products, adding to the heat on the largely unregulated sector.

Shares of Coinbase fell nearly 13% to $67.33 (about Rs 5,500) in extended trading after the company said on Wednesday that the regulator had issued a Wells notice – a statement official that SECOND employee intends to recommend an enforcement action.

The company said potential enforcement actions would be tied to aspects of Coinbase’s spot market as well as its Earn, Prime, and Wallet products.

The SEC has stepped up its efforts to crack down on the crypto industry since the explosion FTX last year, and staking services like Coinbase Earn is coming under closer scrutiny for being unregistered.

Betting is a process in which electronic money Owners volunteer to participate in validating transactions on the blockchain. These products often offer customers attractive yields.

Last month, Kraken agreed to shut down the US crypto staking service and pay $30 million (approximately Rs 240 crore) in fines to settle SEC fees due to them not registering with the program.

Earlier in the day, the SEC charged Chinese crypto entrepreneur Justin Sun with fraud and accused eight celebrities including the actress. Lindsay Lohan with the unauthorized promotion of its crypto assets.

Coinbase said its services continued to operate as normal after the announcement was made.

Wells notices do not always result in charges or indications that recipients have broken any laws.

© Thomson Reuters 2023


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