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Coinbase Staking Program Could Be In Trouble as Tussle With the SEC Continues

Written by: Delma Wilson

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Delma Wilson

Delma is a B2B Content Marketer, Consultant, Blogger in the field of Blockchain, and Cryptocurrency. In her spare time, she loves to blog, play badminton and watch out ted talks. She likes pets and shares her free time with NGO.

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Aug 11, 2022

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Coinbase Global Inc., the largest US cryptocurrency exchange, recently released its April-June analysis, reporting a $1.1 billion second-quarter loss and lower-than-expected revenue.

Even with a strong listing last year, the COIN stock seems to be falling vigorously and is approximately 60% down from last year. 

Following this, Coinbase also informed investors that it had received “investigative subpoenas” from the Securities and Exchange Commission (SEC). In its most recent quarterly report, Coinbase claimed to be under investigation by the U.S. securities regulators over its token listing processes, staking programs, and yield-generating products.

Coinbase Q2 results

With Coinbase’s larger-than-expected quarterly losses, its shares tumbled by 6% on 9th August 2022. 

Trading volumes were slashed in half to just $217 billion in the second quarter. With retail participation sinking to 68% and institutional trading falling to 46%, investors seem to be losing faith and pulling back from Coinbase.

Coinbase’s adjusted loss was $4.76 a share in the quarter, as compared to the expected $2.65. Revenue also seemed to drop by 63%, clearly missing market expectations.

Coinbase’s tussle with the SEC

It’s been observed that the SEC has been aggressive in its investigations of the crypto space after the Terra crash that took place this year, and has increased its checks over how crypto exchanges and firms operate. 

Coinbase seems to have a rough equation with the SEC after the commission suspected the exchange of listing tokens that were securities. 

Nevertheless, Coinbase clearly denied any such allegations, and mentioned in its latest regulatory filing:

“As with all regulators around the world, we are committed to productive discussion with the SEC about crypto assets and securities regulation”.

The SEC is also investigating charges of insider trading by an ex-employee of Coinbase.

The Investigation Continues..

The SEC does not seem to be letting up easily. 

It has now extended its investigation to Coinbase’s staking program.

Coinbase is not the first crypto exchange to offer these services. Staking services allow people to use their holdings to verify transactions and secure the blockchain network. In turn, users can generate yields or earn rewards for giving such permissions.

Coinbase commented in the 10-Q form, “The Company has received investigative subpoenas and requests from the [U.S. Securities and Exchange Commission] for documents and information about certain customer programs, operations, and existing and intended future products, including the Company’s processes for listing assets, the classification of certain listed assets, its staking programs, and its stablecoin and yield-generating products.” 

Coinbase’s disclosure underlines that the firm is under pressure on multiple fronts.

However, the exchange seems to be highly resilient and confident in its processes. Even after the latest SEC investigations.

Coinbase said in the filing that it believes that “These investigations will not have a material adverse effect on Coinbase’s financial condition.”

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Delma Wilson

Delma is a B2B Content Marketer, Consultant, Blogger in the field of Blockchain, and Cryptocurrency. In her spare time, she loves to blog, play badminton and watch out ted talks. She likes pets and shares her free time with NGO.

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