Coinbase’s stock, a cryptocurrency exchange, dropped by over 20% when trading opened on June 6. As of the time of writing, the stock has recovered some of the losses and is now being traded at $50.14, compared to the intra-day low of $46.43. The company’s market capitalization is presently estimated to be $13.7 billion.
On the same day, the United States Securities and Exchange Commission (SEC) brought a legal action against Coinbase, accusing it of running an unregistered national securities exchange, broker, and clearing house, as well as failing to register its crypto asset staking-as-a-service program. SEC Chair Gary Gensler remarked:
At the same time as the SEC announcement, a task force consisting 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 claimed that “Coinbase has breached securities laws by offering its staking rewards program accounts to Alabama residents without registering to offer or sell these securities.”
Within 28 days of the order, Coinbase must respond and demonstrate why it should not be required to stop offering unregistered securities in Alabama.
On April 14th, 2021, Coinbase’s stock was launched on the U.S. Nasdaq exchange. Its shares have gone down 88% from their highest point of around $435, which occurred on the day of its listing. In order to be listed, the exchange had to submit a Form S-1 to the SEC to get the regulator’s approval.
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