Joshs Finance

Cryptocurrency exchange Coinbase’s disappointing tale of endless troubles – Business Today

The third largest crypto exchange in the world, Coinbase, has run into a lot of trouble lately. The exchange had let go of 20 per cent of its workforce last month due to financial constraints. The exchange was hoping for better times ahead but there seems to be no respite as regulatory bodies probe the exchange for malpractices while stock prices tank drastically.

Cathie Woods dumps Coinbase 

Seasoned investor Cathie Wood’s investment firm ARK Investment Management shed 1.4 million shares of the crypto company on Tuesday. The investment firm was the third largest shareholder in the exchange, holding 9 million shares as of June 2022.

The share is currently trading at $62.25, down 83.67 per cent from its listing price.

The insider trading scam

On July 21, the US Department of Justice charged former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and their colleague Sameer Ramani with wire fraud in connection with the first ever crypto insider trading scam. Ishan Wahi allegedly leaked information to his accomplices concerning crypto assets that were to be listed on Coinbase, and the three illegally profited $1.5 million. The brothers were apprehended in Seattle on July 21.

Coinbase’s chief security officer, Phillip Martin, announced on his official Twitter account that Wahi had been terminated and that the company was co-operating with the Department of Justice.

Also Read: What is the Coinbase insider trading scam Twitter is raving about? – BusinessToday

The SEC investigation

The US Securities and Exchange Commission (SEC) has been investigating the crypto exchange. The regulatory body believes that Coinbase has inappropriately allowed investors to trade digital assets that should have been registered as securities.

The SEC has been probing nine crypto assets linked to the exchange. The regulatory body believes seven of this crypto assets are actually securities.

Coinbase, in a statement, requested that the SEC clearly outline the regulatory structure for digital assets.

Moreover, Paul Grewal, chief legal officer of Coinbase, announced in a blog post last Friday, “Coinbase does not list securities on its platform. Period.”

He further said, “Seven of the nine assets included in the SEC’s charges are listed on Coinbase’s platform but none of them were securities.”

Also Read: Coinbase CEO blames RBI for informal pressure, exchange marks 35% drop in revenue  – BusinessToday

The exchange marked a gloriously failed attempt at entering the Indian markets in April this year. The exchange got into trouble with the NPCI for UPI payments. Armstrong went on record during the company’s earnings call to say that the Reserve Bank of India has “placed a shadow ban on cryptocurrencies.” Interestingly, Coinbase has invested in top Indian crypto firms like CoinSwitch Kuber, CoinDCX, and Vauld, among others.

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