Coinbase Faces SEC Probe on Crypto Listings

Philipe F

Jul 28, 2022 - 1 min read

Coinbase has faced significant amounts of scrutiny from the U.S. SEC since the platform decided to increase the amount of tokens listed on its platform. The company now faces an investigation by the SEC on its listings for whether or not it allowed American citizens to trade digital assets that should have been registered as securities.

The U.S. regulators have gotten more serious about cracking down on the crypto industry ever since the market significantly fell from all-time highs. Chair of the SEC Gary Gensler commented that more should be done to protect retail investors within the industry.

The tension between the SEC and Coinbase increased significantly since July 21st when one of the company’s former employees was arrested for insider trading.

If the 150+ digital assets listed on Coinbase were deemed securities, Coinbase would be required to register as an exchange with the SEC.

Coinbase claims that it does not list securities according to an entry in its blog despite the majority of the digital assets on the platform passing the Howey test. Coinbase claims that it analyzes whether an asset could be considered a security before listing it on its platform.

Further probing by the SEC could potentially lead to the agency to sue companies or individuals.

Despite Gary Gensler arguing that many cryptocurrencies should be under the purview of the SEC, they have not said specifically which coins are considered securities.