The noose is tightening around Coinbase. While the American company pays the price the cryptocurrency crisisit now faces an investigation by US stock market policeman, the SEC (Securities and Exchange Commission), he reveals Bloomberg.
Eager not to be left behind by the competition, Coinbase has continued to add new cryptocurrencies to its platform. However, according to the American regulator, some of these tokens fall under the relevant legislation titles. In other words, the SEC suspects that Coinbase offers its users securities that should be registered in its eyes.
If so, this would mean that the American platform would have to request a change of status from the SEC in order to be authorized to offer its users access to the securities in question. In this context, the regulator will then carry out thorough investigations into Coinbase’s asset listing practices, in order to determine whether or not they are fraudulent. The San Francisco company already has a clear opinion on the matter. On July 22, 2022, Paul Grewal, Chief Legal Officer of Coinbase, published a Tribune in the evocative title on the company blog: “Coinbase not listing stocks, end of story”.
Former Coinbase executive accused of inside trading
The aggressive tone of the platform is testament to the nervousness that currently reigns within its workforce. And for good reason, just days ago, the SEC indicted a former Coinbase executive, as well as his brother and a friend, for inside trading. The latter are accused of having carried out illicit transactions on at least 25 crypto-assets, for a profit of 1.5 million dollars, based on confidential information. At the heart of this scheme to rack up this jackpot is Ishan Wahi, a former product manager at Coinbase, on the team tasked with listing cryptocurrencies on the platform.
Precisely because of his privileged position, the latter had early access to sensitive information, such as the calendar for registering new crypto-assets on Coinbase. According to the SEC, Ishan Wahi used his status with the firm to inform his brother, Nikhil Wahi, and friend, Sameer Ramani, between June 2021 and April 2022 of upcoming cryptocurrency listings on the platform, so they can transact in the related virtual assets before they are publicly introduced on Coinbase.
Once the new cryptocurrencies were listed on the platform, their price skyrocketed, thus significantly enriching the trio. Despite the precautions taken to avoid being unmasked, in particular by using anonymous ethereum wallets, last April a Twitter account gave the alert, prompting the American authorities to seize the dossier. Ishan and Nikhil Wahi were arrested, while Sameer Ramani is on the run.
18% cut in the workforce
This case therefore strains the nerves of Coinbase’s top management, while the platform is having a difficult time. Rocked by cryptocurrency crash, company no longer even among top 10 cryptocurrency exchange platforms, according to a report of the investment bank Mizuho Securities listed by Bloomberg.
Worse, Coinbase is no longer the world’s leading bitcoin exchange, now dethroned by Binance, according to data from Glassnode. In this delicate context, Coinbase has decided to do so lay off 18% of its workforceor about 1,100 jobs, as of mid-June, while its valuation has been split nearly seven times in a year.