Coinbase shares down 21% following reports that it is facing SEC probe
07/29/2022 / By Belle Carter
Coinbase shares has tumbled following reports that the crypto firm is facing Securities and Exchange Commission (SEC) probe.
The SEC is set to investigate whether Coinbase has improperly allowed users to trade digital assets that have not been registered as securities. Subsequently, company shares closed down more than 21 percent on Tuesday, July 26.
According to reports, the firm has lost more than 75 percent of its value this year.
“I’m happy to say it again and again: We are confident that our rigorous diligence process, a process the SEC has already reviewed – keeps securities off our platform,” Coinbase’s Chief Legal Officer Paul Grewal posted on Twitter. “We look forward to engaging with the SEC on the matter.”
This developed after the Department of Justice charged three men with insider trading.
The Manhattan prosecutors charged Coinbase’s former product manager Ishan Wahi, his brother Nikhil Wahi and Sameer Ramani with wire fraud conspiracy and wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets. (Related: Former Coinbase manager facing charges in first crypto insider trading case.)
In related civil charges, the SEC alleged that Nikhil Wahi and Ramani had sold at least 25 crypto assets for a profit, nine of which the agency identified as securities.
According to the prosecutors, Ishan Wahi used his role with Coinbase to obtain confidential information about upcoming announcements of new crypto assets that would be added to Coinbase’s exchange. He shared the information to his brother and Ramani, who then acquired the assets with Ethereum blockchain wallets. They traded at least 14 times ahead from June 2021 to April this year and accumulated more than $1.5 million in illicit gains.
On the company’s blog site, Grewal stated: “Instead of having a dialogue with us about the seven assets on our platform, the SEC jumped directly to litigation. Their charges put a spotlight on an important problem that the United States does not have a clear workable regulatory framework for digital asset securities.”
He added that instead of crafting tailored rules inclusively and transparently, the SEC is relying on these types of one-off enforcement actions to try to bring all digital assets into its jurisdiction, even those assets that are not securities.
The crypto firm filed on July 22 a petition to the SEC calling for actual rulemaking so the crypto securities market has a chance to develop. They are worried that the charges suggest the SEC has little interest in this most fundamental role of regulators.
“But in the absence of a concrete digital asset securities regulatory framework from the SEC, we remain confident that Coinbase’s rigorous review process keeps securities off their platform. We remain eager to share our perspective with the SEC, especially through a formal rulemaking process desperately needed,” the legal officer said.
Other crypto firms, such as San Francisco-based Ripple, are also fighting lawsuits from the SEC.
Bipartisan bill that seeks to regulate stablecoins put on hold
Meanwhile, a bipartisan bill that seeks to regulate stablecoins has been put on hold until a further review is completed, the Wall Street Journal reported.
Congress is said to be delaying consideration of the said bill to curb potential risks posed by stablecoins, cryptocurrencies that attempt to peg their market value to some external reference. The vote on the measure is pushed back for at least several weeks. The potential deal would have marked the first significant step to apply tougher rules on the cryptocurrency industry.
Lawmakers and their staff had worked through the weekend trying to hammer out remaining policy issues with the legislation. However, at least some core issues remained outstanding.
Those issues delayed consideration of the package until at least September, when Congress is expected to return from its late-summer break.
Some policy makers worry that stablecoins could be vulnerable to mass withdrawals by investors if doubts emerge about their ability to redeem tokens at a one-to-one ratio to official currencies. This could push stablecoin issuers to liquidate their reserves, which could take down asset prices and potentially damage broader financial markets.
Meanwhile, regulatory officials were not comfortable at the speed with which the bill’s supporters are pushing to vote on the measure. Officials at the SEC and other regulators had already lodged concerns about the draft bill.
Visit CryptoCult.news for more news about this economic cult that believes in this virtual and intangible form of money.
Watch the below video that talks about the arrest of a former Coinbase product manager for insider trading.
This video is from the Chinese taking down EVIL CCP channel on Brighteon.com.
More related stories:
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