SEC's Response to Challenge Groundbreaking XRP Ruling
U.S. Fed's Vice Chair Barr Suggests CBDC Decision Remains a ‘Long Way’
Turkish Crypto Exchange Thodex CEO Faruk Özer Sentenced to 11,196 Years in Prison for Collapse
Coinbase (COIN) stock experienced a decline on Tuesday following a lawsuit filed by the U.S. Securities and Exchange Commission (SEC), accusing the company of breaching federal securities law.
Shares of Coinbase experienced a significant drop, falling by as much as 20% at the market open. However, they later recovered slightly, trading 15% lower at $47.10 as of 10:07 a.m. in New York (14:07 UTC), according to TradingView prices. Notable investors in Coinbase include The Vanguard Group, ARK Invest led by Cathie Wood, Nikko Asset Management, Fidelity, and BlackRock.
In March, Ark Invest increased its holdings in Coinbase by acquiring an additional 301,437 shares for its ARK Innovation ETF (ARKK). As of Monday, the fund held approximately 11 million shares of Coinbase, as indicated by data available on the ARK Invest website.
The SEC accused Coinbase of engaging in multiple activities simultaneously without proper registration. They alleged that Coinbase operated as an unregistered broker, exchange, and clearing agency, as it solicited customers, processed orders, facilitated bids, and acted as an intermediary.
“The legal fight will be long and costly for Coinbase, but it might be difficult to argue and prove that they didn't commingle and unlawfully offer exchange, broker-dealer, and clearinghouse functions,” Edward Moya, a senior markets analyst at Oanda, said.
The lawsuit against Coinbase was filed the day after the SEC filed a similar suit against Binance, which is the largest cryptocurrency exchange worldwide. As a result, Coinbase shares experienced a 9% decline on Monday. Another brokerage platform, Robinhood Markets (HOOD), also suffered a 3% drop in its shares. Robinhood reported a first-quarter revenue of $38 million from cryptocurrency trading.
Both Binance and Coinbase were issued Wells Notices earlier this year as warnings. In response, Coinbase addressed the notice in April and contested the allegations made by the SEC.
