Coinbase stock plunges 20% on SEC lawsuit

Cryptocurrency exchange Coinbase dropped more than 20% at its opening on June 6. At press time, the shares have trimmed some losses and are currently trading at $50.14, compared to an intraday low of $46.43. The company’s market capitalization is currently $13.7 billion.

On the same day, the SEC and the Commission filed a filing lawsuit v. Coinbase, alleging operations of an unregistered national stock exchange, broker, and clearing agency and its failure to register an offering and sale of its staking-as-a-service program. SEC Chairman Gary Gensler commented:

“Coinbase’s alleged failures deny investors important protections, including rulebooks preventing fraud and manipulation, appropriate disclosure, safeguards against conflicts of interest, and routine inspections by the SEC.”

Coinciding with the SEC announcement, a task force of 10 state security regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin issued a bid order against Coinbase. The order alleged that “Coinbase is violating securities law by offering staking rewards program accounts to Alabama residents without registration to offer or sell these securities.”

Under the order, Coinbase has 28 days to respond and show why it did not direct them to cease and desist from selling unregistered securities in Alabama.

On April 14, 2021, Coinbase stock appeared on the US Nasdaq Stock Exchange. Shares are currently down 88% from their all-time high of around $435, which was achieved on the day of listing. As part of the requirements to list, the exchange was required to file an S-1 form to register with the Securities and Exchange Commission and obtain approval from the regulator.

The Journal: Can You Trust Cryptocurrency Exchanges After FTX Crashes?

CoinbaselawsuitPlungesSECstock
Comments (0)
Add Comment