In separate cases last week the DOJ and the SEC charged a former Coinbase employee and two other individuals with wire fraud (DOJ) and violating the antifraud provisions of the securities laws (SEC).
The basic allegations underlying both cases were the same - the former Coinbase employee learned which crypto assets or tokens were going to be listed on Coinbase before that information was made available to the public. The former employee then shared the information with his two co-defendants who purchased the tokens, prior to the tokens being listed, and sold the tokens once they were listed at a significant profit. The crypto assets or tokens in question, in both the SEC and DOJ cases, were all traded on the Coinbase exchange, but the SEC deemed nine of the twenty-five tokens involved to be "securities".
However, the SEC has not charged Coinbase with operating an unlicensed exchange. Many wondered how the SEC could charge individuals with violating the securities laws and Coinbase, the exchange that listed the assets, could escape scrutiny. The answer may be that it can't!
Bloomberg and several other media outlets reported today that Coinbase is facing a US probe into whether it improperly let Americans trade digital assets that should have been registered as securities, according to individuals familiar with the matter. Coinbase’s shares dropped 21% today.
But according to Paul Grewal, chief legal officer of Coinbase, Coinbase is "confident that our rigorous diligence...
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