Coinbase is one of the world’s largest and most powerful cryptocurrency exchanges, but lately, it’s having a hard time.
Coinbase Is Being Looked at by the SEC
Things started out rough a few months ago when the company announced it was going to be enforcing a hiring freeze due to the ongoing crypto winter. Initially, 2022 was going to be the year in which the exchange rose to new heights and practically tripled its workforce, but crashing prices ultimately brought an end to these plans.
From there, things got so bad that the company was forced to let go of about 18 percent of its staff. Then a former executive was wrapped up in a digital currency insider trading scheme. Now, it looks like Coinbase is the subject of a new Securities and Exchange Commission (SEC) investigation. The agency is accusing the platform of selling unregistered securities, a claim that Coinbase is fervently denying.
Billionaire investor and Dallas Mavericks owner Mark Cuban commented on the situation, claiming that the SEC is going to be stricter than ever in the coming weeks and months on any companies that may have failed to adhere to its early rules regarding digital currencies. He described what’s to come as a “nightmare” for the crypto industry and commented:
Think this is bad? Wait till you see what they come up with for registration of tokens. That’s the nightmare that’s waiting for the crypto industry. How else do you keep thousands of lawyers employed and create reasons to ask for more taxpayer money?
The recent move against Coinbase is tied to the fact that a former employee was arrested on charges of insider trading. It is believed that seven of the nine digital currencies the employee knew about were not registered securities, meaning the SEC believes Coinbase may have been out of line. The good news is that the maneuver is garnering criticism across the board from individuals like U.S. Senator Patrick Toomey, who disagreed with the SEC’s ruling and said:
[This] enforcement action is the perfect example of the SEC having a clear opinion on how and why certain tokens classify as securities, yet the SEC failed to disclose their view before launching an enforcement action.
The Company Is Denying Any Wrongdoing
Coinbase said it has done nothing wrong; that each token it lists goes through a rigorous verification process to ensure it doesn’t go against any present laws set forth by the SEC or related agencies. In a statement, Paul Grewal – the company’s chief legal officer – said:
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.