Shares of the Coinbase cryptocurrency exchange are collapsed more than 20% at the opening of the session on June 6. At press time, the stock has pared some losses and is currently trading at $50.14, up from an intraday low of $46.43. The company’s market capitalization currently stands at $13.7 billion.
The same day, The United States Securities and Exchange Commission (SEC) filed a demand against Coinbase, alleging operations as an unregistered national stock exchange, broker and clearing agency and not having registered the offer and sale of its crypto asset staking program as a service. SEC Chairman Gary Gensler commented:
“Coinbase’s alleged rulings deprive investors of key protections, including rules that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine scrutiny by the SEC.”
Concurrent with the SEC’s announcement, a task force made up of 10 state security regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin issued a show cause order against Coinbase. The order alleged that “Coinbase violates securities law by offering its staking rewards program accounts to Alabama residents without a record to offer or sell such securities.”
Under the order, Coinbase has 28 days to respond and show why it should not be ordered to cease and desist from selling unregistered securities in Alabama.
On April 14, 2021, Coinbase shares debuted on the US NASDAQ stock exchange. Currently, the shares are down 88% from their all-time high of about $435, reached on the day of their debut. As part of its listing requirements, the exchange had to file an S-1 form to register with the SEC and gain regulatory approval.
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