- The company received investigative subpoenas and requests from the SEC
- SEC also requested information on existing and intended future products
- Recently, the exchange announced that it will offer Ethereum staking
Coinbase confirms that the SEC continues to investigate some of its products, including the staking program.
The company received investigative warrants and requests from the Securities and Exchange Commission.
“The Company has received investigative subpoenas and requests from the [U.S. Securities and Exchange Commission] for documents and information about certain customer programs, operations, and existing and intended future products, including the Company’s processes for listing assets, the classification of certain listed assets, its staking programs, and its stablecoin and yield-generating products,” coinbase reported.
SEC’s investigation
The Securities and Exchange Commission requested documents and information about certain customer programs. SEC also requested information on existing and intended future products.
The information required entailed the company’s processes for listing assets. The classification included certain listed assets, staking programs, its stablecoin and yield-generating products.
According to the shareholders’ letter, the regulator sent Coinbase a voluntary request for information. The shareholders’ letter, addressed on August 9, pointed out that the request happened in May.
Coinbase reiterated that it remained unaware of whether the request would warrant an investigation.
Coinbase regularly gets formal and informal questions from regulators. The questions request Coinbase’s views on certain key factors. The key factors in question comprise the development of the crypto economy, products and operations.
The staking program
Coinbase recognizes staking as a high-growth area. Recently, the exchange announced that it would back the Ethereum staking for institutional investors in the crypto sector.
The exchange reported a $1.09 billion net loss in the second quarter. Coinbase continues to struggle amid the recent market crash. The commission earned from crypto staking kept the crypto exchange afloat.
The commission earned from crypto staking accounted for 8.5% of revenue in the second quarter. The rate declined at a lower rate than trading revenue.
With SEC’s continuous scrutiny over the product, product development may be hampered.
Coinbase versus SEC
Meanwhile, these investigations only add to the mountain of legal and regulatory issues faced by Coinbase. SEC’s investigations dug further and unearthed the firm’s trading of unregistered securities.
Coinbase allowed Americans to trade unregistered security assets in July. SEC doubled its investigation on the crypto exchange. This came after Coinbase increased the number of listed tokens on its platform.
The exchange now lists over 150 cryptocurrencies. This comes about after keeping the number of listed tokens to a minimum for years. The exchange started listing more tokens in 2021 to boost competition.
SEC and Coinbase enjoy a frosty relationship. The publicly listed crypto exchange severely criticized the regulator. Coinbase criticized the regulator’s actions over the crypto space multiple times.
The most recent attack saw Coinbase deny listing securities after the SEC sued an ex-employee. The ex-employee’s trading history unmasked the allegations. On July 21, the SEC accused Coinbase of insider trading.
Meanwhile, nine digital tokens traded acted as securities based on the lawsuit. Coinbase listed seven of the tokens in question. Surprisingly, Coinbase published a blog claiming that it did not list securities.
The crypto exchange advised the Securities and Exchange Commission to focus on providing regulatory frameworks for crypto.
The firm remains embroiled in five legal cases. Accumulation of legal cases may consequently result in a class action.
