The U.S. Securities and Exchange Commission (SEC) is investigating whether Coinbase Global Inc. improperly let Americans trade digital assets that should have been registered as securities, Bloomberg News reported on Monday.
A Coinbase spokesperson told Reuters the company does not list securities on its platform, while the regulator declined to comment on the report.
The company’s legal head Paul Grewal said Coinbase will engage with the SEC on the matter. “We are confident that our rigorous diligence process — a process the SEC has already reviewed — keeps securities off our platform,” Grewal said.
The SEC’s scrutiny has increased ever since the crypto trading platform expanded the number of tokens in which it offers trading, Bloomberg report said, citing two sources.
The probe by the SEC’s enforcement unit predates its investigation into an alleged insider trading scheme that was revealed last week.
In the first insider trading case involving cryptocurrency, U.S. prosecutors had charged Ishan Wahi, a former product manager at Coinbase, for sharing confidential information about forthcoming announcements of new cryptocurrency assets that Coinbase would allow users to trade through its exchange.
In related civil charges, the regulator alleged that Wahi’s brother Nikhil Wahi and their friend Sameer Ramani purchased and sold at least 25 crypto assets for a profit, nine of which the agency identified as securities.
The SEC had declined to confirm at the time whether it would pursue action against Coinbase for listing the tokens deemed securities in the complaint.
The cryptocurrency platform has previously asked the regulator to develop rules that work for digital asset securities.
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