Explainer: Why is Coinbase, America’s largest crypto exchange, in trouble?
The company was listed
So, how did the company get here? We explain.
Coinbase cuts workforce by 18%
Coinbase co-founder and CEO Brian
Armstrong acknowledged in the note that the company “grew very rapidly” during the bull run of the cryptocurrency market in 2021 and was over-hired.
“Our team has grown very rapidly (4x in the last 18 months) and our employee costs to effectively manage this uncertain market are very high,” he said.
insider trading fees
In the cryptocurrency insider trading case, the US Justice Department on July 21 charged former Coinbase product manager Ishaan Wahi, his brother Nikhil Wahi and friend Samir Ramani with wire fraud in connection with a plan to conduct insider trading in cryptocurrency assets.
Coinbase Chief Security Officer Philip Martin
declared said on their official Twitter handle that they have terminated the employee and are cooperating with the Department of Justice.
SEC launches investigation against Coinbase
Bloomberg reported that the US Securities and Exchange Commission (SEC) was separately investigating Coinbase whether it allows Americans to trade digital assets that should have been registered as securities.
Coinbase has come under increased scrutiny from the SEC ever since the platform expanded the number of tokens that offer trading. The report said the SEC investigation predates the agency’s investigation into the alleged insider trading scheme that was mentioned earlier.
The SEC alleges that Nikhil Wahi and Ramani “purchased at least 25 crypto assets, of which at least nine were securities”, another Bloomberg report said.
On July 22, Coinbase Chief Legal Officer Paul Grewal said in a blog, “Coinbase does not list securities on its platform. Period.”
He added that seven of the nine assets included in the SEC’s fee are listed on Coinbase’s platform, but none of them are securities.
In a statement on July 21, Coinbase asked the SEC to clearly define the regulatory framework for digital assets.
ARK Investment dumps Coinbase
ARK Investment Management, the investment firm of crypto evangelist Katherine Wood, dumped 1.4 million shares of Coinbase when the share price dropped to $53 on July 26. According to a Bloomberg report, ARK Invest was the third largest shareholder of Coinbase with 9 million shares as of the end of June.
It is this chain of events that has brought Coinbase to its current state. newest