Coinbase Under SEC Investigation For Exchange, Wallet, And Earn Product Activities
The SEC has issued a warning to Coinbase, in relation to an ongoing investigation into several aspects of its operations, including its exchange, staking service, Coinbase Earn, and Coinbase Wallet.
Because Bitcoin
March 23, 2023
The Securities and Exchange Commission (SEC) has issued a Wells Notice to Coinbase, signaling investigations into various offerings and continuing a trend of regulatory warnings aimed at US-based crypto companies.
In a blog post, Coinbase confirmed that the notice pertains to its staking service, exchange, Coinbase Wallet, and Coinbase Earn. The company stated that it will continue to operate its products and services as usual, despite the Wells Notice not providing much information for it to respond to.
Coinbase also revealed that it has rejected over 90% of asset applications seeking to be listed on its platform.
Following the Wells notice, the Coinbase CEO and co-founder Brian Armstrong has likened the SEC to pickleball referees who cannot agree on the rules of the game. He criticized U.S. regulators for their inability to establish a clear regulatory framework for this new industry.
https://twitter.com/brian_armstrong/status/1638654192138199041
The news caused Coinbase's stock to drop as much as 11.6% in after-hours trading, trading around $70.80. A year prior, the stock was trading at $183.00.
In February, rival exchange Kraken settled with the SEC over charges related to its staking-as-a-service program, which resulted in the closure of those operations in the U.S. and a $30 million fine. Coinbase maintains that its staking activity does not violate U.S. securities law, arguing that staking is not considered a security under the U.S. Securities Act or the Howey test used by the SEC to determine whether an investment contract is a security.
According to sources familiar with the matter, Coinbase is in talks with its institutional clients about the possibility of launching a crypto-trading platform in a foreign country.
Bloomberg has reported that the exchange has not yet finalized a decision on the location for this trading platform. This move comes at a time when US regulators are tightening their grip on the crypto industry, as evidenced by the recent regulatory action taken against FTX, a cryptocurrency exchange that collapsed in November.
You can read more about it here: https://www.becausebitcoin.com/post/coinbase-is-considering-the-launch-of-a-trading-platform-outside-of-the-united-states
