SEC Checks Coinbase’s Past

A bald man sitting behind a desk with a microphone in front of him.  A sign on the table that says "Respected Gary Gensler."

Gary Gensler, the chair of the US Securities and Exchange Commission, has been very persistent in his claims that cryptocurrencies should be defined as securities for the purpose of regulation.
picture: Bill Clark Bowl (Getty Images)

Two US regulatory agencies that do not agree on who should be responsible for regulating crypto are both working in very different ways to try to regulate the industry. One is gaining the ire of the entire crypto industry, especially since it won’t hold back from calling most cryptocurrency trading “stocks.”

It is reported that the Securities and Exchange Commission is looking into Trapped The past of cryptocurrency exchange Coinbase, specifically in an effort to determine whether the company allows people in the United States to trade digital assets when they are not classified as securities. Bloomberg According to three anonymous sources close to the matter, the SEC has pushed more aggressively into the cryptocurrency exchange since it began offering additional coins to trade on its platform. The platform allows users to trade Over 150 different icons.

The news comes less than a A week after SEC publicly announce File a complaint against Former Coinbase Project Manager Ishan Wahi with Insider Trading to use knowledge of the platform’s public listings and advise his brother Nikhil Wahi and his friend Sameer Ramani. the two allegedly bought At least 25 crypto assets, “at least nine of which are securities,” then sold the assets after the announcements to bring in a tidy profit of more than $1.1 million from June of last year to last April. They are the three they were also charged With conspiracy fraud and wire fraud according to US Attorney’s Office for the Southern District of New York. It is called “fFirst ever insider trading system for cryptocurrency.”

But according to Bloomberg, the Securities and Exchange Commission was investigating Coinbase even before it was brought in this is the last forward complaint. On the company side, Coinbase Chief Legal Officer Paul GrewAl wrote on his own Twitter “We are confident that our rigorous due diligence process — one that the Securities and Exchange Commission has already reviewed — keeps securities off our platform.”

Major Coinbase Twitter also linked to a blog post from last week in which Faryar Shirzad, the company’s chief policy officer, said the supposed assets traded on Coinbase are not securities. claimed Company Analytics Whether the asset is a security based on the old Howey اختبار testan outdated framework for the Securities and Exchange Commission to determine if something qualifies as an investment contract.

But the Securities and Exchange Commission appears less interested in what the company says about its assets and what it actually does. In last week’s edition, SEC Director of Enforcement Gurbir Grewal said, “We are not concerned with the labels, but with the economic facts of the show.” According to Bloomberg, the SEC decides that digital currency falls within its jurisdiction when it comes to financing a company and profiting from that company’s decisions.

This is an important point that is often missed when talking about cryptographic regulations. Although crypto has been around for more than a decade, regulators are still trying to answer questions about the best way to handle cryptocurrencies. Most of this is because lawmakers and other officials are focusing too much on the technical nature of cryptocurrencies, rather than the impact they are currently having on both the market and the people who trade them.

The Commodity Futures Trading Commission Prefers You to Be a Legal Regulator for Cryptocurrency

Back in June, a group of bipartisan senators Pay a new bill To create the first “regulatory framework” for digital assets. Although the bill aims to define the limits of cryptocurrency, it also places most of the regulatory burden on the smaller Commodity Futures Trading Commission rather than the Securities and Exchange Commission, which is essentially what is called futures contracts for crypto transactions rather than securities. One thing cryptocurrency proponents often try to associate with is the cryptocurrency industry still young (Bitcoin has been around for 14 years) and we are still waiting for the real innovations that blockchain technology can bring.

No wonder, then, that CFTC Chairman Rustin Behnam said yesterday at Brookings Institution event They were creating a new office, called the Office of Technology Innovation, to replace the agency’s old fintech team. as pointed out Decryptthe previous office started before Christopher Giancarlo, who previously chaired the Commodity Futures Trading Commission under former President Donald Trump, and after leaving the agency became an executive director at several crypto companies. He is known as “Crypto Dad” by cryptocurrency proponents.

Of course, the Securities and Exchange Commission is not impervious to the revolving door. Former Deputy Director of the Supreme Education Council Christian Sabella It was set up by Coinbase in 2021.

So the CFTC and the Securities and Exchange Commission (SEC) are locked in a battle of words over the definition of cryptocurrency. After the Securities and Exchange Commission (SEC) announced its insider trading accusation against the former Coinbase employee last week, CFTC Commissioner Caroline Pham called the case “regulation through enforcement,” noting that “given the overriding public interest and open questions about the legal statuses of various devices.” digital assets…the CFTC must use all available means to fulfill its legal mandate.”

in Tabuk At the Nasdaq Future Technology conference last month, Pham said that while the SEC regulates stock markets, “the CFTC has regulatory touch points with just about everything else” including combating fraud and manipulation in the spot markets. She explained that the agency has taken more than 50 crypto enforcement actions since 2015, adding that a crypto-regulatory bill passed by Congress to expand the agency’s jurisdiction would enhance US competitiveness and “enable growth.”

However, SEC President Gary Gensler has long argued that a lot of cryptocurrency is under his control Jurisdiction, especially since there Billions of dollars of fraud It occurs annually and is detrimental to the activity of retail investors. The Securities and Exchange Commission has previously claimed That the current crypto enforcement branch has taken more than 80 enforcement actions against the industry since 2017.

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