Coinbase Shares Drop After SEC Files Lawsuit
June 06 2023 - 9:18AM
Dow Jones News
By Dean Seal
Shares of Coinbase are trading lower after the largest crypto
trading platform in America was hit with an enforcement action from
the U.S. Securities and Exchange Commission.
The stock is down 16.5% at $49 in premarket trading. When the
market closed Monday, shares were up by nearly two thirds since the
start of the yearb but down 17% over the prior 12 months.
Wall Street's top regulator alleged in a New York federal court
Tuesday morning that Coinbase is operating as an unregistered
securities exchange, broker and clearing agency.
Coinbase has earned billions of dollars in revenue by collecting
transaction fees from crypto traders whom it deprived of
disclosures and protections afforded by registration with the SEC,
the agency said.
The action comes a day after the SEC filed a similar complaint
against the global crypto exchange Binance for allegedly flouting
U.S. securities laws.
Mizuho analysts said in a note on Tuesday that more than 30% of
Coinbase's revenue could be at risk based on the content of the
Binance suit, which targets the exchange's crypto-staking program
and suggests that alt coins are securities that have to be
registered. About 20% of Cobinase's revenue comes from alt coins
and another 10% comes from staking accounts.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
June 06, 2023 09:03 ET (13:03 GMT)
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