Crypto stocks drop after US SEC sues Coinbase for failing to register


The logo for Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, is displayed on the Nasdaq MarketSite jumbotron and others at Times Square in New York, U.S., April 14, 2021. REUTERS/Shannon Stapleton

(Reuters) -Shares of Coinbase Global fell on Tuesday and were on track for their biggest one-day percentage decline since late March after the cyrptocurrency exchange found itself in the crosshairs of the U.S. securities regulator along with Binance.

The U.S. Securities and Exchange Commission sued Coinbase, accusing it of illegally operating without registration with the regulator. That happened a day after the SEC filed a lawsuit against Binance and its CEO, Changpeng Zhao.

In a complaint filed in Manhattan federal court on Tuesday, the SEC said Coinbase has since at least 2019 operated as an unregistered broker by handling cryptocurrency transactions, evading the disclosure requirements meant to protect investors.

Coinbase shares were down 13.4% at $50.81 after earlier hitting their lowest level since January. The stock, however, is up nearly 43% on a year-to-date basis.

Global regulators have been keeping a close watch on the crypto world after a string of high-profile collapses wiped out more than a trillion dollars from the digital asset industry's market capitalization last year.

"For a lot of companies specifically within the crypto ecosystem, this is the regulatory response that investors have been concerned (about) for years now. These were largely unregulated," said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Company.

While the Coinbase news helped drag down Blockchain farm operator Bitfarms earlier on Tuesday, the stock has since recovered and was last up 1.8%.

Crypto miner Riot Platforms was down 0.7% while Hut 8 Mining fell 1.2%. Marathon Digital reversed earlier losses and was last up 1.6%.

Also, after falling earlier, Bitcoin, the world's biggest cryptocurrency, was up 1.4%. Binance's cryptocurrency was up 0.24% after falling 9.2% on Monday.

Coinbase had disclosed in March that it received a "Wells notice" from the SEC threatening a potential lawsuit over certain products.

Paul Grewal, chief legal officer and general counsel at Coinbase, issued a statement on Tuesday saying the "SEC's reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance."

"The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we'll continue to operate our business as usual," Grewal said.

(Reporting by Manya Saini and Shristi Achar A in Bengaluru, Sinéad Carew in New York; editing by Paul Simao)

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

   

Next In Tech News

Books and plants make you look good on Zoom, British research shows
BMW to offer highly automated driving from the end of the year
Preview: Killing goblins with the help of Pawns in ‘Dragons’ Dogma II’
Review: 'The Cursed Crew' for PC/console – Dead pirates go on a treasure hunt
Apple identifies issues causing overheating in the iPhone 15
Your ‘karma’ can make you money on Reddit
In Latin America, data centre plans fuel water worries
‘Not stupid’: China girl determined to find husband who doesn’t expect her to do housework in contrast to situation at home, delights social media
Elon Musk's X Corp in another legal fight over unpaid rent, this time as plaintiff
Forget Harry Styles. Riot Games is one of LA’s biggest stars headlining the Kia Forum�

Others Also Read