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SEC: securities and Coinbase tokens are the same thing

SEC: securities and Coinbase tokens. A review by a Bitcoin mixer: mixer.money
SEC: securities and Coinbase tokens are the same thing

  1. Calls for cryptocurrency regulation are growing
  2. Attacks on exchange employees
  3. The exchange has long been under scrutiny

Coinbase has increased the number of tokens it offers to trade, and this has drawn scrutiny from the Securities and Exchange Commission. The SEC’s investigation into whether the tokens are securities or not was followed by another one. The Commission investigated a supposed insider trading scheme and as a result sued a former Coinbase manager and two other people last week.

“We are confident that our rigorous diligence process―a process the SEC has already reviewed―keeps securities off our platform, and we look forward to engaging with the SEC on the matter,” Coinbase’s chief legal officer Paul Grewal wrote on Twitter. The SEC declined to comment.

Calls for cryptocurrency regulation are growing

There are increasing calls in Washington for American regulators to take more action to oversee cryptocurrencies as digital currencies have fallen from all-time highs, wiping out many billions of dollars in market value. SEC Chairman Gary Gensler spoke about trading platforms and said they should put in more effort in order to protect retail investors.

SEC Chairman Gary Gensler

Coinbase is America’s largest trading platform. It offers the opportunity to trade over 150 tokens. If these products were considered securities, the firm would have to register as an exchange with the SEC.

Coinbase has repeatedly argued with the SEC over how it controls the industry. Last week, the company urged the SEC to offer clearer rules. Meanwhile, after being relatively cautious for years, Coinbase has increased the number of its tokens.

Attacks on exchange employees

Tensions escalated on July 21. The Commission accused a former employee of violating insider trading rules by providing their brother and a friend information that allowed them to buy tokens before listing. Although the SEC did not allege any violations by Coinbase, it announced that it had found the following: nine of the dozen digital tokens traded by the men were securities, including seven that the exchange said had already been listed. Federal prosecutors in New York City also charged the three suspects with conspiracy to commit fraud.

In reply, Coinbase published a blog post titled: “Coinbase does not list securities. End of story.” Grewal noted that the Department of Justice chose not to pursue securities fraud charges, despite considering the same facts as the SEC. He added that Coinbase analyzes whether an asset can be considered a security before listing tokens and “also considers the regulatory compliance and information security aspects of the asset.”

Coinbase’s chief legal officer Paul Grewal. A review by a Bitcoin mixer: mixer.money

Investigations by the SEC’s enforcement division could result in the regulator suing companies or individuals.

The exchange has long been under scrutiny

Coinbase went public last year. Previously, the company stated that it had faced scrutiny from regulators. In its first-quarter earnings report, Coinbase commented that it “had received investigative subpoenas from the SEC for documents and information about certain customer programs, operations, and intended future products, including the company’s stablecoin and yield-generating products.”

To decide whether a digital asset is a security, the Commission applies a legal test based on a 1946 US Supreme Court ruling. In accordance with that, the SEC believes that a token generally falls under SEC jurisdiction when it involves investors investing money to fund a company with the intention of benefiting from the efforts of the entity’s management.

Gensler has long claimed that many cryptocurrencies fall under the regulator’s jurisdiction and that firms offering them should register with his agency.

However, the SEC has not stated which coins are securities, and it is up to exchanges to decide whether to list an asset. Platform operators tend to avoid offering these tokens because it could trigger investor protection rules, some of which crypto enthusiasts say are incompatible with digital assets.


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