Crypto exchange Coinbase is said to be facing an SEC investigation over the securities

Crypto exchange Coinbase is said to be facing an investigation by the US Securities and Exchange Commission (SEC) over whether it is allowing users to trade unregistered securities, according to a report from Bloomberg. The Securities and Exchange Commission investigation has not been announced.

Sources close to the situation said Bloomberg The Securities and Exchange Commission (SEC) began taking a closer look at Coinbase’s practices after the exchange added more than 100 additional tokens to its platform, including Dogecoin, the prank cryptocurrency based on the Shiba Inu meme. These types of coins usually perform well after they are first listed, but they are very volatile, and their value usually evaporates over time.

This investigation is separate from the SEC case against former Coinbase Product Manager Ishan Wahi, his brother, Nikhil Wahi, and his friend, Sameer Ramani. The agency accused the three of insider trading earlier this month, alleging Ishaan had “repeatedly claimed the timing and content of upcoming listing announcements” for his brother and friend, resulting in more than $1.1 million in earnings. It also claims that Nikhil Wahi and Ramani have purchased “at least 25 crypto assets, at least nine of which are securities.”

Paul Grewal, Coinbase’s chief legal officer, disputes the SEC’s allegations about Coinbase’s listing of securities in a Medium post, noting that the Department of Justice did not file security fraud charges against Coinbase when indicting Nikhil Wahi, Ishaan Wahi and Samir Ramani for insider trading. Grewal states that “none” of the assets referred to in the SEC fees are considered securities.

“Coinbase has a rigorous process in place to analyze and review every digital asset before it is made available on the exchange — a process that has been reviewed by the SEC itself,” Grewal wrote. “This process includes an analysis of whether the asset can be considered collateral, as well as consideration of the regulatory compliance and information security aspects of the asset.”

In general, a security is a tradable financial asset that carries a monetary value and must be registered with the Securities and Exchange Commission. However, the tricky part about encryption is that it isn’t All Digital assets are considered securities. In 2018, former Securities and Exchange Commission Chairman Jay Clayton told CNBC that cryptocurrencies that replace “sovereign currencies,” such as Bitcoin and Ether, are not securities — but digital assets and tokens used in initial coin offerings (ICOs) are. .

If this sounds confusing, it is because it is. Last week, Coinbase asked the Securities and Exchange Commission (pdf) to clarify exactly what it considers a security, claiming that the US lacks a “clear and enforceable regulatory regime.” Coinbase argues that the SEC is adopting an “enforcement first” approach, rather than establishing a set of rules that companies must adhere to.

“We are confident that our rigorous due diligence process—one that the SEC has already reviewed—keeps securities off our platform, and we look forward to engaging with the SEC on this matter.” Grewal writes on Twitter.

Leave a Reply

%d bloggers like this: