US Securities Commission threatens to sue Coinbase over crypto products, shares drop 13 percent
The US Securities and Exchange Commission (SEC) has threatened to sue Coinbase Global over certain cryptocurrency exchange products, adding to tensions in the largely unregulated sector.
Shares of Coinbase fell nearly 13 percent to $67.33 (about Rs. 5,500) in extended trading after the company said on Wednesday that the regulator had issued a notification from Wells — a formal announcement that the SEC staff intends to recommend enforcement action.
The company said potential enforcement actions will be related to the spot market aspects of Coinbase as well as its Earn, Prime and Wallet products.
The Securities and Exchange Commission (SEC) has been ramping up efforts to crack down on the cryptocurrency industry since the FTX crash last year, and stacking services like Coinbase’s Earn are under increased scrutiny for not being registered.
Staking is a process in which cryptocurrency holders volunteer to participate in the validation of transactions on the blockchain. These products often offer customers amazing returns.
Last month, Kraken agreed to shut down its cryptocurrency hoarding service in the US and pay $30 million (roughly Rs. 240 crores) in fines to settle charges from the SEC that failed to register the software.
Earlier in the day, the Securities and Exchange Commission charged Chinese cryptocurrency tycoon Justin Sun with fraud, accusing eight celebrities including actress Lindsay Lohan of illegally promoting his crypto assets.
Coinbase said its services continued to operate as normal after the notice was issued.
A Wells notice does not always result in a charge or an indication that the recipient has violated any law.
© Thomson Reuters 2023