Coinbase (Crypto exchange) is facing an investigation from SEC for its role in allowing Americans to trade different digital assets. The watchdog believes that these assets present on Coinbase were not registered as financial assets.
However, Coinbase believes that the company didn't allow the users to trade any securities. In fact, the company said that it would work with the SEC to solve this matter. The legal head of Coinbase said that they are very confident about the due diligence process of the company.
Ever since Coinbase increased the number of digital assets on its platform, it has been facing increased scrutiny from the SEC.
This new discussion by the SEC is on top of the insider trading incident that the watchdog is investigating.
Insider Trading Involving Cryptocurrencies
Coinbase's former product manager was charged with the insider trading of cryptocurrencies by US prosecutors. According to the officials, he was sharing confidential information related to the new digital assets that would be listed on the Coinbase exchange.
When a well-known crypto exchange such as Coinbase lists a digital asset, the price of that digital asset increases in value. And when some people knew about the announcement of new supported assets ahead of time, they could able to make a lot of money!
According to the charges, the friend and the brother of the accused were involved in the buying & selling of 25 different cryptocurrencies. Furthermore, they were able to make a profit from their trading activities! Out of these 25 digital assets, at least 9 of them were regarded as securities.
When asked for confirmation, the SEC declined to confirm whether it took any strict action against Coinbase or not.
Earlier, Coinbase had repeatedly asked the SEC to create a framework that dictates how to work with digital assets and securities.
Currently, Coinbase is a famous crypto exchange in the world and is among the top ones in the United States of America. Any strict action against the crypto exchange could send shockwaves to the crypto markets as a whole.