The Securities and Exchange Commission, the federal watchdog over all things finance in the United States has set its sights on Coinbase this Summer season. The move is startling investors because of the length of its accusations and the possible repercussions for the rest of the crypto community.
The SEC stated that Coinbase listed seven cryptocurrencies that should have been registered as securities. Furthermore, these seven mysterious cryptocurrencies are currently being investigated for insider trading, all leading back to managers within Coinbase.
What does this mean for the larger crypto community and what will the implications of this criminal case mean for other tokens?
Billionaire investor and Shark Tank host, Marc Cuban had a foreboding message to all of those watching the SEC case. He said that whatever the SEC ultimately decides with the Coinbase insider trading case, it will set the standard for what is considered security and what is not.
Senator Pat Toomey, engaged in an online conversion regarding the case, saying,
“Yesterday’s enforcement action is the perfect example of the SEC having a clear opinion on how and why certain tokens classify as securities,” said Toomey, ranking member of the Senate Banking Committee. “Yet the SEC failed to disclose their view before launching an enforcement action.”
Marc Cuban responded by saying,
“Think this is bad? Wait till you see what they come up with for the registration of tokens. That’s the nightmare that’s waiting for the crypto industry. How else do you keep thousands of lawyers employed and create reasons to ask for more taxpayer money?”
The SECs Investigation
The SEC is not playing games this crypto winter, as it goes and searches for the rule breakers in the crypto industry. This time, Coinbase is at the center of the SEC’s purview, scrambling to produce an image of innocence in the face of public opinion.
However, the SEC isn’t interested in public relations or putting on a good face for investors, they are looking for crypto blood, wherever they can find it.
This new probe by the SEC all began with the initial investigation into one of Coinbase’s employees. In the very first insider trading case involving cryptocurrency, U.S. prosecutors had charged Ishan Wahi, a former product manager at Coinbase, for sharing confidential information about forthcoming announcements of new cryptocurrency assets that Coinbase would allow users to trade through its exchange.
In related civil charges, the regulator alleged that Wahi’s brother Nikhil Wahi and their friend Sameer Ramani purchased and sold at least 25 crypto assets for a profit, nine of which the agency identified as securities.
Coinbase Assures Everything Will Be Alright
Coinbase is announcing that there is nothing to worry about in relation to the performance of its exchange, its assets, and users’ ability to liquidate their holdings if needed. With that being said, the crypto community will be watching this case very closely.
This case will serve as the determiner of what is and isn’t security. How can new tokens be registered and do they have to be registered with the SEC?
For now, there is nothing too much to worry about other than your favorite crypto exchange being investigated by the SEC. It wouldn’t be the first time nor the last time that a new major player on Wall Street has to go through hoops just to build a reputable name for themselves with the SEC.
In the coming weeks, we can expect a more detailed report of the insider trading cases involving the Coinbase employees and whether or not that affects the larger institution as a whole.
We can only hope, that it does not.
