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

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June 6 (Reuters) – Shares of Coinbase Global (COIN.O) fell on Tuesday and were on course for their biggest one-day percentage decline since late March after the cryptocurrency exchange found itself in the crosshairs of the American securities regulator with Binance.

The United States Securities and Exchange Commission sued Coinbase, accusing it of operating illegally without registration with the regulator. This came a day after the SEC filed a lawsuit against Binance and its CEO, Changpeng Zhao.

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

Coinbase shares fell 13.4% to $50.81 after hitting their lowest level since January. The stock, however, is up nearly 43% year-to-date.

Global regulators are keeping a close eye on the crypto world after a series of high-profile crashes wiped out more than $1 trillion in the digital asset industry’s market capitalization last year.

“For many companies specifically within the crypto ecosystem, this is the regulatory response that investors have been concerned about for years. These were largely unregulated,” said Matt Stucky, Senior Portfolio Manager at Northwestern Mutual Wealth Management Company.

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

While news from Coinbase helped push down blockchain farming operator Bitfarms earlier on Tuesday, the stock has since rallied and was last up 1.8%.

Crypto miner Riot Platforms (RIOT.O) fell 0.7% while Hut 8 Mining fell 1.2%. Marathon Digital (MARA.O) reversed earlier losses and last rose 1.6%.

Additionally, after dropping earlier, Bitcoin, the world’s largest cryptocurrency, rose 1.4%. Binance’s cryptocurrency rose 0.24% after falling 9.2% on Monday.

Coinbase had revealed in March that it had received a “Wells notice” from the SEC threatening a possible lawsuit for certain products.

Paul Grewal, Chief Legal Officer and General Counsel of Coinbase, issued a statement on Tuesday saying that “the SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting economic competitiveness. of the Americas and to companies like Coinbase that have a demonstrated commitment to compliance.”

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

Reporting by Manya Saini and Shristi Achar A in Bengaluru, Sinad Carew in New York; edited by Paul Simao

Our standards: The Thomson Reuters Trust Principles.

Manya Saini

Thomson Reuters

Manya Saini reports on prominent US publicly traded financial companies including top Wall Street banks, card companies, asset managers and fintechs. Also covers late-stage venture capital funding, initial public offerings on US exchanges, and news and regulatory developments in the cryptocurrency industry. His work typically appears in the finance, markets, business, and future of money sections of the website. Contact: 9958867986

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