The US Securities and Exchange Commission (SEC) is reportedly investigating cryptocurrency exchange platform Coinbase on suspicion of providing US-based users to trade unregistered securities.
The investigation follows allegations leveled against Coinbase by the SEC in an unrelated insider trading case directed at a former product manager at the publicly-traded exchange company in which the Commission highlighted seven cryptocurrencies listed on the platform as securities.
The new SEC probe against Coinbase predates ongoing insider trading investigations in which US-based prosecutors charged former Coinbase product manager Ishan Wahi for sharing confidential information regarding the release of information regarding the listing of new tradable assets prior to official announcements.
Securities Probe Follows Insider Trading Investigation
Related charges leveled against Wahi’s brother Nikhil Wahi and associate Sameer Ramani traded 25 different cryptocurrencies for profit including the nine assets identified by the SEC as securities.
SEC scrutiny targeting Coinbase has increased in tandem with the expansion of supported assets on the trading platform, with Coinbase subsequently requesting that the commission clarify digital asset classification rules.
In statements published via Reuters, Coinbase legal head Paul Grewal stated that the company would comply with SEC regarding the matter.
“We are confident that our rigorous diligence process — a process the SEC has already reviewed — keeps securities off our platform,”
The assets listed on Coinbase highlighted as securities within the ongoing insider trading investigation by the SEC are RLY, DDX, XYO, RGT, LCX, POWR, DFX, KROM, and AMP.
Coinbase Defends Listing of Assets
Statements issued by Coinbase via the Coinbase blog through an April post updated earlier this week demarcates the platform’s position on SEC allegations of securities listings, noting that “No assets listed on our platform are securities, and the SEC charges are an unfortunate distraction from today’s appropriate law enforcement action.”
SEC justification for the classification of listed assets as securities are outlined within a 62-page SEC complaint stating that each of the nine organizations responsible for the issuance of the assets “invited people to invest on the promise that it would expend future efforts to improve the value of their investment.”
The SEC has, at time of publishing, not yet issued any statements or comments regarding the probe. Coinbase’s asset directory page currently lists over 200 digital assets.