Decrypt | Andrew Asmakov | Jul 26, 2022

The popular crypto exchange Coinbase is facing a new SEC probe investigating whether it let Americans trade digital assets that should have been registered as securities, according to a Bloomberg report citing people familiar with the matter.

Although the SEC didn’t allege any wrongdoing by Coinbase at the time, the agency said it had determined that nine tokens traded by the individuals accused of insider trading contained “hallmarks of the definition of a security.”

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Of those nine digital assets mentioned by the SEC, seven are currently still listed at Coinbase.

Previously, the SEC said that it does not consider Bitcoin (BTC), the industry’s largest cryptocurrency, to be a security, nor did the agency classify Ethereum as such.

Coinbase Responds

Responding to the Bloomberg report, Coinbase’s chief legal officer Paul Grewal took to Twitter to deny the exchange is listing unregistered securities.

I’m happy to say it again and again: we are confident that our rigorous diligence process—a process the SEC has already reviewed—keeps securities off our platform, and we look forward to engaging with the SEC on the matter. A refresher: https://t.co/SaacvrZEiU

— paulgrewal.eth (@iampaulgrewal) July 26, 2022

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In a blog post last week, the San Francisco-based firm said:

This process includes an analysis of whether the asset could be considered to be a security, and also considers regulatory compliance and information security aspects of the asset.  Coinbase does not list securities on its platform. Period.

Prior to that, Coinbase said the company had filed a petition with the SEC to improve “rulemaking on digital asset securities.”

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