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Coinbase Battles Regulatory Storm As SEC Crackdown Intensifies

CEO defends operations while facing SEC accusations, stock rally at risk.

The month of June marked the beginning of a regulatory storm for Coinbase (NASDAQ: COIN). The SEC accused the company of operating as an unregistered broker, a charge that was part of a broader crackdown on cryptocurrency exchanges. Despite the significant fallout, which saw Binance (CRYPTO: BNB) experience a $300 million liquidation of crypto positions, Coinbase CEO Brian Armstrong defended the company’s operations, contrasting its case with Binance’s.

Supreme Court Victory Amid Share Liquidation

Mid-June brought a significant victory for Coinbase as the U.S. Supreme Court backed the company in a key ruling, bolstering its right to arbitrate disputes. However, this period also saw the continued sale of shares by Armstrong.

Regulatory Scrutiny And Bold Moves

As June drew to a close, Coinbase’s rulemaking request remained under SEC scrutiny. Despite these challenges, the company launched a 4% rewards program for USDC, demonstrating its resilience in the face of regulatory headwinds.

Legal Maneuvers and Bank Account Rumors

July kicked off with Coinbase lawyers responding to the SEC’s attempt to challenge Coinbase’ defense which cited the Biden-Nebraska case as a precedent. This legal maneuver was another win for Coinbase. However, rumors began to circulate that Bank of America accounts linked to Coinbase were being shut down. Armstrong addressed these rumors, assuring users that the company was investigating the issue.

Representation of Bitcoin and other cryptocurrencies. Coinbase is a leading cryptocurrency exchange and platform headquartered in San Francisco, California. (JAKUB PORZCKI/GETTY IMAGES)

Private Meetings and SEC Demands

Mid-July saw Armstrong meeting privately with Democratic lawmakers to discuss digital asset legislation. These meetings underscored the company’s commitment to shaping the regulatory landscape. 

Recent Developments

The SEC reportedly wanted Coinbase to delist everything except Bitcoin, a demand that would significantly impact the company’s operations and user offerings.

Stock Rally And Regulatory Risks

Despite Coinbase’s stock rising more than 192% year to date, analysts warned investors not to chase the rally as regulatory risks still lingered.

Coinbase is a leading cryptocurrency exchange and platform headquartered in San Francisco, California. Founded in 2012 by Brian Armstrong and Fred Ehrsam, it has grown to become one of the most prominent and trusted platforms for buying, selling, and storing various cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and more. Coinbase went public through a direct listing on the Nasdaq in April 2021.


© 2023 Zenger Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

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