• Thu. Feb 29th, 2024

Crypto stocks fall after SEC sues Coinbase for failing to register

Crypto stocks fall after SEC sues Coinbase for failing to register

Shares of Coinbase Global fell on Tuesday, on track for their biggest one-day percentage drop since late March after the cryptocurrency exchange found itself in the crosshairs of the US securities regulator along with Binance.

Shares of Coinbase Global fell on Tuesday, on track for their biggest one-day percentage drop since late March after the US securities regulator found the cryptocurrency exchange in the crosshairs with Binance.


The US Securities and Exchange Commission sued Coinbase for allegedly operating illegally without registering with the regulator. That came a day after the SEC filed a lawsuit against Binance and its CEO Changpeng Zhao.
In a complaint filed Tuesday in Manhattan federal court, the SEC said Coinbase has operated as an unregistered broker since at least 2019, handling cryptocurrency transactions while evading disclosure requirements to protect investors.

Coinbase shares fell 13.4 percent to $50.81 after hitting their lowest level since January. The stock, however, is up nearly 43% on a year-to-date basis.

Global regulators are keeping a close eye on the crypto world after high-profile crashes wiped more than a trillion dollars off the digital asset industry’s market capitalization last year.

“This is a regulatory response that investors have been worried about for years, especially for a lot of companies within the crypto ecosystem. These were largely out of control,” said Matt Stuckey, senior portfolio manager at Northwestern Mutual Wealth Management Co.

While the Coinbase news helped drag down blockchain farm operator BitFarms earlier on Tuesday, the stock later recovered and rose as much as 1.8%.

Crypto miner Riot Platforms fell 0.7%, while Hut 8 Mining fell 1.2%. Marathon Digital reversed earlier losses and was last up 1.6%.

Also, the world’s largest cryptocurrency, Bitcoin, rose 1.4% after earlier declines. The Binance cryptocurrency rose 0.24% after falling 9.2% on Monday.

Coinbase disclosed in March that it had received a “Wells Notice” from the SEC threatening to sue some of its products.

Paul Grewal, Chief Legal Officer and General Counsel at Coinbase, released a statement on Tuesday saying “The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry harms America’s financial competitiveness and companies like Coinbase.” A demonstrable commitment to compliance.”

”The solution, not litigation, is legislation that allows fair rules for the road to be transparently developed and applied equitably. In the meantime, we will continue to operate our business as usual,” Grewal said.

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