SEC Probing Coinbase for Allegedly Listing Securities: Report

The investigation predates last week’s insider trading lawsuit, according to the report.

The U.S. Securities and Exchange Commission (SEC) is reportedly probing crypto exchange Coinbase, a publicly-traded company it oversees, on suspicion it allowed U.S. persons to trade unregistered securities.

Bloomberg reported Monday that the regulator was investigating some of the tokens listed on the exchange. The SEC alleged last week that seven cryptocurrencies listed on Coinbase were securities in an unrelated insider trading case brought against a former product manager at the exchange.

SEC Chair Gary Gensler has previously also said he believed that Coinbase should register as a national securities exchange, given some of the cryptocurrencies it has listed.

Coinbase, for its part, has criticized the SEC for not providing clear rules for defining how cryptocurrencies might be deemed securities. The exchange’s Chief Policy Officer, Faryar Shirzad, said existing securities laws may not fit cryptocurrencies.

CEO Brian Armstrong’s stated goal of listing every token the exchange legally can appears to have had its drawbacks: According to two people Bloomberg spoke to, the SEC gave coinbase’s practices a closer look amid the increase in token listings.

1/ Reminder about how Coinbase lists assets: our goal is to list *every* asset where it is legal to do so.

— Brian Armstrong - barmstrong.eth (@brian_armstrong) June 28, 2021

Coinbase’s asset directory page featured over 200 tokens at press time Monday.

Spokespeople for the SEC and Coinbase did not immediately return requests for comment.