Coinbase falls 14% after SEC warning
Source: Arkansas Democrat-Gazette/AP
Shares of Coinbase tumbled before the opening bell Thursday and closed 14.1% lower after the cryptocurrency trading platform received a warning from the Securities and Exchange Commission that it potentially faces securities charges. Coinbase Global Inc. said in an SEC filing Thursday it had received a Wells Notice from the agency, which indicates regulators believe laws protecting investors were violated.
Among the practices being targeted by the SEC is "staking." Users of trading platforms can stake their cryptocurrency, essentially locking up some of their assets, in exchange for payment later, much like earning interest rates in a savings account. Those assets are used by platforms like Coinbase to guarantee other transactions taking place on the blockchain.
The SEC says Coinbase and other platforms must register as a securities platform to offer such services, and only after it is approved by the SEC's Division of Corporation Finance. A Wells Notice for Coinbase is another warning shot from SEC Chairman Gary Gensler who is trying to establish the agency's oversight of crypto firms when they wander into areas typically associated with banking.
Kraken, a rival crypto exchange platform, agreed to settle in February for $30 million and to stop offering staking as a service. Coinbase CEO Brian Armstrong sent out several tweets late Wednesday criticizing the SEC.
Read more: https://www.arkansasonline.com/news/2023/mar/24/coinbase-falls-14-after-sec-warning/
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