Less than a week after the U.S. Department of Justice (DOJ) hit a former Coinbase manager and two associates with insider trading charges, the U.S. Securities and Exchange Commission (SEC) is turning up the heat on Coinbase after the exchange added more tokens for trading.
Cryptocurrency exchange Coinbase Global is now in the crosshairs of SEC investigators over allegations that the platform allowed U.S. investors to trade digital assets that were actually securities and should have registered as such, Bloomberg reported on Tuesday (July 26), citing three sources with insider information.
The DOJ’s July 21 case against Ishan Wahi, a one-time product manager at Coinbase, his brother Nikhil Wahi, and his associate Sameer Ramani, is the first-ever insider trading case involving cryptocurrency, PYMNTS reported last week.
The charges stem from an alleged scheme using confidential Coinbase information about the next crypto assets coming up for listing on the exchange from approximately June 2021 to April 2022.
While the SEC didn’t allege wrongdoing by Coinbase, it said that nine of the dozens of digital tokens the accused traded were securities, Bloomberg reported.
The SEC’s current scrutiny into the Nasdaq-listed Coinbase is over the increased number of tokens the cryptocurrency exchange is offering for trading, two of the sources told Bloomberg.
AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX, and KROM are the nine crypto asset securities named in the SEC complaint, Bloomberg reported. In its complaint, the SEC said that those crypto tokens are really unregistered securities.
Coinbase enables the trading of more than 150 tokens that — if deemed securities — would require the firm to register as an exchange with the SEC. Last week Coinbase called on the SEC to propose clearer rules, PYMNTS reported.
The petition Coinbase proposed on July 21 asks the SEC to launch a public discussion centered on what a regulatory framework for cryptocurrencies should look like. Coinbase is now the second-largest exchange in the U.S.