Coinbase (COIN) shares tumble as SEC launches investigation

YEREVAN (CoinChapter.com) — The shares of Coinbase Global Inc (COIN) went crashing down upon news of an investigation by the U.S. Securities and Exchange Commission (SEC). According to a recent report by Bloomberg, the securities watchdog suspects the company allowed US Citizens to trade in unregistered securities. 

The watchdog suspects the firm’s cryptocurrency exchange platform facilitated the trade through digital assets. 

The asset directory page of the crypto exchange has over 200 tokens listed. 

Last week, the SEC charged a former Coinbase manager with insider trading. At the time, it had claimed the crypto exchange had listed seven tokens as unregistered securities. As per reports, these included Flexa’s AMP, RLY, DDX, XYO, RGT, LCX, and POWR.

However, it is unclear if the securities watchdog is still after the same tokens. 

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COIN sheds over 15% as the SEC comes knocking

As the news of the SEC crackdown spread, Coinbase shares tanked. Stock prices fell from around $62 to an intraday low of $56.54 while writing.

Coinbase stock prices have lost more than 77% of their value year to date, Google Finance charts reveal. 

The development comes as another blow, a day after JP Morgan informed clients that Coinbase shareholders “face risk of higher share dilution stemming from restricted stock units.”

Last month, Coinbase stock prices crashed further after investment bank Goldman Sachs downgraded its rating on the crypto exchange to “sell” from its previous “neutral” position.

In 2021, SEC Chair Gary Gensler called for Coinbase to register with the financial regulator for the same reasons. 

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Coinbase disagrees with the SEC

Coinbase executives disagree with the SEC’s illegal securities listing allegations. Last week, when the talk of unregistered securities surfaced, the company published a long blog post titled “Coinbase does not list securities. End of story.”

The company also filed a petition to the Securities and Exchange Commission, criticizing the current state of cryptocurrency regulation in the U.S.

“The U.S. does not currently have a functioning market in digital asset securities due to the lack of a clear and workable regulatory regime. Digital assets that trade today overwhelmingly have the characteristics of commodities,” 

the petition said.

Coinbase called on the SEC to draft new rules to facilitate using digital asset securities. According to the company, this will allow for a more efficient and effective allocation of capital in financial markets. It will also create new opportunities for investors. 

Coinbase Chief Legal Officer Paul Grewal also clarified once again that they do not issue securities. 

The crypto community will watch what the securities regulator will do. The SEC’s future actions will have huge implications for the entire industry.