Coinbase shares collapse as SEC regulatory noose tightens
- The US SEC checks whether the company has offered unregistered securities.
- Ffirst of all Esee VSas for Insider-Jriding in Ddigital VSanoint, VSharass a Fformer Coinbase Global Inc. Pproduct Madministrator.
- Cathy Wood’s Ark funds dump Coinbase shares for the first time this year.
- Coinbase shares are now down about 79% year-to-date, with earnings expected Aug. 9e.
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It’s been a tough few days for Coinb(CORNER). The first time, late last week, news of the arrest by federal prosecutors of a former product manager accused of passing inside information about future token listings to his brother and another investor. The company now faces a US investigation into whether it improperly let Americans trade digital assets that should have been registered as securities, says several media reports. Shares of the company fell 21%.
Coinbase’s scrutiny from the U.S. Securities and Exchange Commission has increased since the platform increased the number of tokens it offers trades in, according to the media. The probe by the SEC’s enforcement unit predates the agency’s probe into an alleged insider trading scheme that led the regulator last week to prosecute a former chief executive. Coinbase and two other people.
To decide whether a digital asset is a security, the SEC applies a legal test, which stems from a 1946 U.S. Supreme Court decision. jurisdiction of the SEC when it comes to investors who inject money to finance a company with the intention of profiting from the efforts of the management of the organization. Coinbase Chief Legal Officer Paul Grewal posted the following response: “We are confident that our rigorous due diligence process, a process that the SEC already hasreviewed, keeps the titles off our platform, and we look forward to engaging with the SEC on this.
JThe only good news is that the company has not been indicted by the Department of Justice or sued by the Securities and Exchange Commission (SEC). However, the company risks being classified as an operator of an illegal stock exchange. Coinbase responded combatively, criticizing the SEC for its overreach and emphasizing its view that its tokens fall outside the agency’s jurisdiction.
Cathy Wood’s Ark Funds dumps Coinbase shares for the first time this year
Funds controlled by Cathie Wood sold shares of Coinbase Global Inc. for the first time this year by selling more than 1.41 million shares, which were worth about $75 million as of Tuesday’s close, according to trading data. Ark’s dailies compiled by Bloomberg.Ark was the company’s third-largest shareholder, holding about 8.95 million shares at the end of June, according to data compiled by Bloomberg. It has largely bought shares of the platform since its debut in 2021 with the last acquisition in May. This is a huge loss for ARK as conflicting reports put the average purchase price of the stock around the $260 mark, with the initial purchase on the IPO at $328.28. per share.
With all the uncertainty surrounding Coinbase, all eyes will undoubtedly be on its earnings release scheduled for the 9the August, after market close.
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Written by: Zain Vawda, Market Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda