Coinbase Takes a Hit on Reports on US SEC Probe

Jul 26, 2022
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Coinbase (COIN) is having a tough day.

At the moment, shares are down more than 17%, or $12 a share on heavy volume of 18.2 million shares, as compared to its daily average of 15.5 million.

All on news it’s facing off with the U.S. SEC into whether it let investors trade digital assets that should have been registered as securities.  

The company says, “We 100% disagree with the SEC’s assertion that any of the crypto assets we list are securities,” Paul Grewal, Coinbase’s chief legal officer, as quoted by Barron’s. “We are confident that our rigorous diligence process—a process the SEC has already reviewed—keeps securities off our platform, and we look forward to engaging with the SEC on the matter.”

If tokes are not securities, the SEC may not have much jurisdiction over exchanges, such as Coinbase.  If that’s the case, the SEC would not be able to regulate listings or trading of tokens.  However, according to the SEC, most tokens “most likely” will meet the definition of a security.

Technically, we’d avoid the COIN falling knife for now.

If things get worse, and it breaks below $40.83, it could see lower lows.  Right now, we’re avoiding the stock, hoping for a positive legal outcome.