One of the most important exchanges on the market, Coinbasecriticized the Securities and Exchange Commission (SEC) for its lack of regulatory clarity and action, while itself receiving its share of criticism following accusations of insider trading – which led two US regulators to indict a former SEC employee stock Exchange.
Coinbase announced on Thursday that it had filed a petition asking the SEC to “start making rules for digital assets,” stating that the existing rules for securities do not work for digital assets, and saying that the regulator does not did not want to set new rules for the crypto sector. Coinbase believes this puts investors at risk, taking the example of XRP funds lost during the regulator’s legal battle with Ripple.
According to the exchange, most digital assets today have the characteristics of securities, and most are designed to avoid securities laws in the United States. They stated the following,
“Crypto-assets that are securities need an up-to-date set of rules for safe and effective practices. Crypto-assets that are not securities need certainty that they are outside of these rules. Anything less will result in entrenching existing technologies to the detriment of innovation and, ultimately, consumers.”
This statement was made the same day the SEC announced the indictment of individuals who allegedly “purchased at least 25 crypto assets, nine of which were securities.” This has once again raised many questions within the cryptosphere about regulatory (non-)clarity in the US.
The Commodity Futures Trading Commission (CFTC) intervened with a statement from the Commissioner Caroline Pham calling for regulatory collaboration, stating that this SEC complaint alleges that “dozens of digital assets, including those that could be described as utility tokens and/or certain tokens attached to decentralized autonomous organizations (DAOs), are transferable securities”:
“The SEC’s allegations could have broad implications beyond this case alone, underscoring how critical and urgent it is for regulators to work together.”
The aforementioned SEC announcement was not strictly about securities, but also focused on the accusations made jointly by the agency and the Department of Justice (Department of Justice, DoJ), against a former Coinbase manager and two other individuals. As reported yesterday, the trio allegedly used confidential information about the assets scheduled to be listed on the exchange.
The SEC announcement clarified that the exchange had warned its employees not to engage in trading operations “based on this confidential information or to communicate it to others”. Yet the “system allegedly generated illicit profits totaling more than $1.1 million [USD]”.
As Cryptonews.com reported a month ago, the SEC has allegedly launched a series of investigations into the activities of numerous crypto exchanges, working to determine whether the companies have put in place adequate protections against insider trading. .
The cryptosphere also had a say, suggesting that Coinbase must have been aware of the situation, with the scheme lasting for about a year at least.
“They know perfectly well which assets they have just listed, it is not difficult to find a portfolio that buys all these assets the day before,” said commented popular trader Cobie (Jordan Fish).
In an April post, updated Thursday, Coinbase wanted to thank the DoJ for acknowledging the exchange’s contribution to holding these individuals accountable. Coinbase also stated that “no asset listed on our platform is a security, and the SEC charges are an unfortunate distraction from proper enforcement action today.”
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