According to Bloomberg, Coinbase Global Inc, the largest cryptocurrency exchange in the US, is being probed by regulators over its ability to allow people to trade assets that should have been registered as securities. securities improperly.
The SEC, also known as the US Securities and Exchange Commission, has increased scrutiny of Coinbase as the platform continues to increase the number of tradable tokens on the platform, according to two people who asked not to be identified. .
The SEC investigation is expected to precede the insider trading investigation, forcing the regulator to sue a former Coinbase manager and two others.
U.S. officials are monitoring the crypto market more closely after cryptocurrencies posted record drops from their peaks, wiping hundreds of billions of dollars off the market. Gary Gensler, chairman of the SEC, has noticed trading platforms and thinks they should do more to protect users.
As the largest crypto exchange in the US, Coinbase allows residents to trade over 150 tokens. If one of these is considered a security, the company needs to register for a license with the SEC.
Coinbase has repeatedly discussed with the SEC how to monitor this new industry. In the last week, the company contacted the SEC proposing a clearer process. Meanwhile, with a cautious approach over the years, Coinbase has increased the number of assets it offers.
Tensions escalated when on July 21, the SEC accused one of the former Coinbase managers of insider trading. By disclosing the information, he helped his relatives buy tokens before listing on the platform.
Although the SEC did not accuse Coinbase of wrongdoing, it also singled out nine of the listed tokens as securities, including AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX, and KROM. .
In response, Paul Grewal, Chief Legal Officer at Coinbase, pointed out that the Department of Justice did not conclude a breach while looking at similar facts to the SEC.
“Prior to the token listing, Coinbase analyzed whether the asset was a security and considered regulatory aspects and securities information of the asset,” Paul said.
Coinbase is the largest cryptocurrency exchange in the US. Last year, this company was listed on this national stock exchange. Previously, the company also admitted to encountering scrutiny from the authorities. In its first-quarter report, the company received an SEC subpoena asking for clarification on its client program as well as future products such as stablecoins or profit-generating products.