US regulator the Securities Exchange Commission (SEC) has opened a probe into NASDAQ-listed cryptocurrency exchange Coinbase, a Bloomberg report has revealed.
The investigation regards the sale of unregistered securities, a long-running point of contention between the crypto market and US financial regulators.
Coinbase has consistently contended that the exchange does not host securities of any sort, in stark contrast to SEC Chair Gary Gensler’s previous comments before the US Senate Committee.
It’s far from the first time the SEC has taken aim at the crypto exchange.
Just last week the regulator opened an investigation into a former manager on insider-trading charges, resulting in numerous arrests.
As part of the investigation, the SEC took the opportunity to rattle off a shopping list of cryptocurrencies it deems to be unregistered securities, potentially opening the exchange up to some hefty litigation.
Coinbase, for its part, asked for clarity on the subject in a petition filed with the regulator earlier this month.
Laws from the 1930s couldn’t predict crypto. That’s why we filed a petition to @SECGov to issue securities rules that work for crypto securities and unlock a new market for US consumers, developers, and platforms. @faryarshirzad explains ???? https://t.co/tauZjN5ZQV
— Coinbase (@coinbase) July 25, 2022
“SEC’s approach has created enormous risk for investors,” Coinbase stated, while taking aim at its enforcement-first approach.
“The SEC has thus far been unwilling to write new rules for crypto securities. Instead, the Commission recently announced that it will double the size of the enforcement unit that handles crypto and cyber cases,” Coinbase’s petition claimed.
Unlawfully selling unregistered securities can also result in a hefty prison term.
Tokens in the SEC’s cross hairs include AMP, DDX, LCX, POWR and XYO.