Coinbase has been threatened by the SEC whilst its insiders sold $7.4 million worth of the firm's stock in the last 30 days.
Coinbase has been issued a Wells Notice by the SEC over some of its products.
Read more: Coinbase Announces Standard Chartered Partnership, Upgrades Retail Platform in Singapore
“We are prepared for this disappointing outcome and confident in the legality of our assets and services,” Paul Grewal, chief legal officer of Coinbase, said in a statement.
“If needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets.”
The SEC previously issued Coinbase a Wells Notice in 2021, claiming that its "lend" product was a security as it allows users to earn interest by lending out their crypto. Coinbase eventually cancelled the launch of the product.
SEC vs. Crypto
SEC Chair Gary Gensler has repeatedly stated that crypto token products are securities and thus crypto trading platforms must register with the financial watchdog.
However, in the beginning of March, the Commodity Futures Trading Commission (CFTC) stated that Ether and stablecoins should be treated as commodities.
Read more: Sorry SEC, Stablecoins Are Commodities According to CFTC
“Notwithstanding a regulatory framework around stablecoins, they’re going to be commodities in my view,” Behnam said. “It was clear to our enforcement team and the commission that Tether, a stablecoin, was a commodity."
Read more: SushiSwap Served With SEC Subpoena
Coinbase stock sell-off
Coinbase's stock price fell 8.16% in yesterday's trading to $77.14, and fell even further in after hours trading to as low as $64.95.
Armstrong sold $5.8 million in company stock over the period, with $2.24 million being sold off just this week. Between 3–15 March, Armstrong sold 60,000 shares for $3.56 million.
Chief people officer Brock Lawrence, chief accounting officer Jones Jennifer, and chief legal officer Grewal Paul collectively sold stocks worth $1.68 million.
Data also shows that Coinbase insiders and early investors have made $5.8 billion from their sales of the exchange’s stocks since the company listed in 2021.
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