For Coinbase, the challenges keep coming. The former product manager of the cryptocurrency exchange was detained and accused of insider trading less than a week ago. But according to a Monday Bloomberg article, the Securities and Exchange Commission (SEC) is apparently looking into the firm to see if it let customers to trade unregistered securities on its platform.
The investigation, which has not yet been made public, was initiated in part in reaction to the company's choice to increase the variety of tradeable tokens it provides to its customers.
In response to the investigation, Coinbase Chief Legal Officer Paul Grewal posted on Twitter that the company is confident in its "rigorous diligence process, a process the SEC has already reviewed, keeps securities off our platform," and that it "look[s] forward to engaging with the SEC on the matter."
This comes after a string of recent disagreements between the agency and the cryptocurrency exchange, which have been happening more often lately.
Coinbase petitioned the SEC on July 21, 2022, requesting that regulation on digital asset securities get underway. They did this because they believe that "securities norms just do not work for digitally native products." The request shouldn't come as a surprise considering the regulatory body's largely punitive interactions with cryptocurrency and NFT exchanges.
The move exacerbates a tense relationship already present between Web3 businesses and the American regulatory agencies tasked with integrating blockchain-based economies into their current legal frameworks.
If you’re interested in learning more or you’d like to read our in depth guides, join our newsletter.
