Major crypto exchange Coinbase has denied allegations that it lists securities on its platform after the US Securities and Exchange Commission (SEC) launched an investigation over the listing of digital assets that should have been recorded as securities.
In a blog post, Coinbase’s Chief Legal Officer Paul Grewal argued that none of the listed assets on their platform are securities, adding that the method in which they determine whether a digital asset is a security or not has been examined by the SEC itself.
“Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange , a process that the SEC has reviewed ItSElf” – Grewal.
Grewal documented that after the US Department of Justice (DOJ) launched an investigation into a former Coinbase employee’s mishandling of confidential information associated with listing decisions, the SEC separately filed securities fraud charges against the person.
Also read, Famous Producer from Atlanta pleads guilty in Crypto Scam
According to the DOJ, one former employee of the exchange disobeyed insider-trading rules by spreading information to help his brother and a friend purchase tokens just before they were listed on the platform, collectively generating realized and unrealized earnings totaling at least approximately $1.5 million USD.
They traded at least 25 different crypto assets momentarily in advance of listing announcements. The SEC claims that nine cryptocurrencies involved are securities, Grewal communicated in the blog post, adding that the DOJ reviewed the same facts and chose not to file securities fraud charges against those involved.
In a recent tweet, the US Commodity Futures Trading Commission (CFTC) Commissioner Caroline Pham called the SEC’s investigation a striking example of regulation by enforcement. She mentions that the SEC’s allegations could have broad implications beyond this single case, highlighting how critical and urgent it is that regulators work together.
“We agree with Commissioner Pham and, respectfully, 100% disagree with the SEC’s decision to file these securities fraud charges and the substance of the charges themselves” Grewal .
Grewal said that the SEC’s charges stress the important issue that the US doesn’t have a clear or workable regulatory framework for digital asset securities. And instead of crafting tailored rules in an inclusive and translucent way, the SEC is depending on these types of one-off enforcement actions to try to bring all digital assets into its jurisdiction, even when those specific assets are not securities. However, toward the end of the blog post, Grewal does convey that Coinbase is eager to share its perspective with the SEC, particularly through a formal rule-making process desperately needed.
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