Crypto: Coinbase in the crosshairs of the US stockbroker

Not to be left behind by the competition, Coinbase has continued to add new cryptocurrencies to its platform. But the SEC suspects the platform is offering its users securities that it believes should be registered.

The noose is tightening around Coinbase. While the US company bears the brunt of the cryptocurrency crisis, it must now face an investigation by the US stockbroker, the SEC (Securities and Exchange Commission), reveals Bloomberg.

Concerned not to be left behind by the competition, Coinbase has continued to add new cryptocurrencies to its platform. However, for the US regulator, some of these tokens are covered by the law effects. In other words, the SEC suspects Coinbase of offering its users securities that it believes should be registered.

If this were the case, it would mean that the US platform would have to file a status change with the SEC to be authorized to provide its users with access to the titles in question. In this context, the regulator will therefore conduct an in-depth investigation into Coinbase’s asset listing practices to determine whether or not they are fraudulent. The San Francisco-based company already has a clear take on it. On July 22, 2022, Paul Grewal, Coinbase’s Chief Legal Officer, posted a suggestive title on the company’s blog: “Coinbase does not list securities, end of story”.

Former Coinbase Director Accused of Insider Trading

The platform’s aggressive tone reflects the nervousness that currently prevails within the workforce. And with good reason, a few days ago, the SEC charged a former Coinbase executive, as well as his brother and a friend, with insider trading. The latter are accused of conducting illegal transactions based on confidential information on at least 25 crypto assets, for a profit of $1.5 million. At the heart of this scheme to collect this jackpot, we find Ishan Wahi, former product manager at Coinbase, in the team responsible for providing cryptocurrencies on the platform.

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Due to its privileged position, the latter had prior access to sensitive information, such as the calendar for registering new crypto assets on Coinbase. According to the SEC, Ishan Wahi used his status with the company to inform his brother, Nikhil Wahi, and a friend, Sameer Ramani, about upcoming cryptocurrency listings on the platform between June 2021 and April 2022 so that they can transact in the relevant ones. virtual assets before they are publicly launched on Coinbase.

Once the new cryptocurrencies were listed on the platform, their price rose, significantly enriching the trio. Despite precautions taken not to be exposed, particularly through the use of anonymous ethereum wallets, a Twitter account issued the warning last April, prompting US authorities to confiscate the file. Ishan and Nikhil Wahi have been arrested while Sameer Ramani is still at large.

18% of the workforce will be cut

As a result, this case is testing the nerves of Coinbase’s leaders as the platform goes through a rough patch. The company has been shocked since the crypto crash and is no longer even in the top 10 cryptocurrency exchange platforms, according to a report from investment bank Mizuho Securities quoted by Bloomberg.

Even worse, Coinbase is no longer the world’s leading exchange for bitcoin, now dethroned by Binance, according to data from Glassnode. In this delicate context, Coinbase decided to lay off 18% of its workforce, or about 1,100 positions, in mid-June, as valuation split nearly sevenfold in one year.

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