The US Securities and Exchange Commission (SEC) has decided to investigate Coinbase Global to decide whether the platform allowed its clients to trade digital assets that should have been registered as securities. A spokesperson for the platform recently said that Coinbase does not list securities on its platform while the chief legal officer of Coinbase, Paul Grewal said, "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."
According to a Bloomberg report on Monday, three people familiar with the matter said that the SEC's enforcement unit is looking into whether Coinbase wrongfully listed tokens that should have been registered as securities.
The sources also said that the SEC's inquiries began before it named nine crypto tokens as securities in an insider trading lawsuit against a former Coinbase employee and two of his associates.
According to Bloomberg's sources, who asked not to be named, the SEC began its inquiry after Coinbase began to rapidly expand the number of tokens listed on its platform.
The debate over which cryptocurrencies should be regulated as securities has been ongoing for years. As part of the insider trading case revealed last week, the SEC took a bold step by calling nine cryptocurrencies securities, seven of which are currently listed by Coinbase.
In a July 21 blog post, Coinbase was adamant that it does not list securities. "Coinbase has a rigorous process to analyse and review each digital asset before making it available on our exchange — a process that the SEC itself has reviewed," Coinbase Chief Legal Officer Paul Grewal wrote in the post. "But instead of having a dialogue with us about the seven assets on our platform, the SEC jumped directly to litigation."
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