SEC Reportedly Investigating Coinbase Over Crypto Trading

The Securities and Exchange Commission is reportedly investigating Coinbase Global Inc. to find out if it allowed trading in unregistered securities.

Bloomberg News reported late Monday that regulatory scrutiny has increased since Coinbase increased the number of digital tokens it offers for trading. The report says the probe predates a separate investigation into alleged insider trading, in which a former Coinbase executive was charged last week.

The same basic problem seems to be behind both cases: the SEC claims that some cryptocurrencies offered by Coinbase are securities, while the company claims they are not. Last week, the SEC claimed that nine digital assets traded by Coinbase were in fact securities.

“Coinbase does not list securities. End of story,” Coinbase Chief Legal Officer Paul Grewal said in a statement last week.

Coinbase allows over 150 digital tokens to be traded, many of which are much lesser known than bitcoin BTCUSD,
-4.74%
and ethereum ETHUSD,
-6.28%.
According to Bloomberg, if these tokens were to be declared securities, Coinbase would have to register with the SEC as an exchange.

Coinbase shares COIN,
-5.30%
are down about 73% year-to-date as the broader crypto market crashes, versus the SPX of the S&P 500,
+0.13%
17% drop in 2022.

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