Coinbase is one of the largest and most powerful cryptocurrency exchanges in the world, but it has been struggling recently.
The SEC is investigating Coinbase.
Due to the ongoing crypto winter, the company announced a few months ago that it would impose a hiring freeze. Initially, 2022 was expected to be the year in which the exchange reached new heights and nearly tripled its workforce, but plummeting prices put an end to these plans.
Thereafter, the company was forced to lay off approximately 18 percent of its workforce. A former executive was then implicated in an insider trading scheme involving digital currency. Now it appears that Coinbase is being investigated by the Securities and Exchange Commission (SEC). The agency accuses Coinbase of selling unregistered securities, which Coinbase vehemently refutes.
Mark Cuban, a billionaire investor and owner of the Dallas Mavericks, commented on the situation, stating that the SEC will be stricter than ever in the coming weeks and months on any companies that have not adhered to its early rules regarding digital currencies. He referred to the future as a “nightmare” for the cryptocurrency industry and remarked
Think it’s a bad idea? Wait to see what they come up with for token registration. This is the nightmare that awaits the cryptocurrency industry. How else could you keep tens of thousands of lawyers employed and generate justifications for requesting more taxpayer funds?
The recent action against Coinbase is related to the arrest of a former employee on insider trading charges. The SEC believes that seven of the nine digital currencies the employee was aware of were not registered securities, suggesting that Coinbase may have acted improperly. The good news is that the strategy is receiving widespread criticism from individuals such as U.S. Senator Patrick Toomey, who disagreed with the SEC’s decision and stated:
This enforcement action is a perfect illustration of the SEC having a clear opinion on how and why certain tokens qualify as securities, but failing to disclose that opinion prior to initiating an enforcement action.
The business denies any wrongdoing.
Coinbase stated that it has committed no wrongdoing, and that each token it lists undergoes a rigorous verification process to ensure that it does not violate any SEC or related agency regulations. Paul Grewal, the company’s chief legal officer, issued the following statement:
Seven of the nine assets included in the SEC’s charges are listed on Coinbase’s platform. None of these assets are securities. Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange, a process that the SEC itself has reviewed.