Coinbase Refutes Claims That It Lists Securities As SEC Kicks Off Investigation
Coinbase, a major cryptocurrency exchange, has refuted charges that it offers securities on its website, after an inquiry by the US Securities and Exchange Commission (SEC) into the listing of digital assets that should have been registered as securities.
The SEC has investigated Coinbase's approach to determining whether a digital asset is a security or not in a blog post by the company's Chief Legal Officer Paul Grewal.
"Coinbase has a comprehensive procedure in place to assess and review each digital asset before making it accessible on our exchange – a process that the SEC has approved," he said.
Grewal said that when the DOJ initiated an investigation into a former Coinbase employee's abuse of sensitive information relating to listing decisions, the SEC brought securities fraud charges against the person separately.
Former exchange employees allegedly broke insider-trading regulations to assist their brothers and friends acquire tokens before they were listed on the platform, resulting in "realized and unrealized profits totaling at least about [USD] 1.5 million."
They traded at least 25 different crypto assets in the days leading up to listing announcements. The SEC contends that the nine cryptocurrencies involved are securities, while the DOJ "examined the same evidence and elected not to pursue securities fraud charges against individuals implicated."
Caroline Pham, Commissioner of the US Commodity Futures Trading Commission (CFTC), dubbed the SEC's investigation "a stunning example of regulation by enforcement" in a recent tweet. She said that the SEC's claims "may have far-reaching consequences beyond this particular instance," emphasizing "how vital and urgent it is that regulators work together."
"We agree with Commissioner Pham and respectfully disagree with the SEC's decision to pursue these securities fraud allegations as well as the content of the accusations," Grewal said.
The SEC's allegations emphasize the critical problem that the "US lacks a clear or functional regulatory framework for digital asset securities."
"And, instead of establishing customized regulations in an accountable and participatory manner, the SEC is relying on these sorts of one-time enforcement actions to attempt to bring all digital assets within its jurisdiction, even those that are not securities," he stated.
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