SEC Investigates Coinbase Over Crypto Staking Products

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The US Securities and Exchange Commission (SEC) is investigating Coinbase Global Inc. for its staking programs, which allow users to receive rewards for holding specific cryptocurrencies.

Coinbase confirmed this news in its quarterly report stating,

"The company has received investigative subpoenas and requests from the SEC for documents and information about certain customer programs, operations, and existing and intended future products." 

In the report dated August 9, Coinbase stated that the government regulatory agency sent a voluntary request for information in May. The request seeks to look into various areas of the exchange, including Coinbase's staking programs, asset-listing process, asset classification, and stablecoin products. 

For now, Coinbase is unsure if the probe would lead to a formal investigation.

Coinbase, like many of its counterparts, provides staking services as a key strategy to diversify earnings from trading, which tends to diminish during market downturns. 

This enables users to earn a return on their cryptocurrency holdings by delegating them to assist in verifying transactions and securing the blockchain network.

Revenue from blockchain rewards, mostly from staking, contributed 8.5% of net revenue for Coinbase in the second quarter. However, it also reported a net loss of $1.09 billion in the same quarter, an indication that it took a big hit during the market crash. 

Previous reports also show that the SEC is investigating the crypto exchange for potentially making unregistered securities available for trading. 

These additional inquiries further add to Coinbase's pile of legal and regulatory issues. Aside from that, the corporation is involved in about five legal disputes, some of which have the potential to become class actions, for reasons ranging from misleading clients to not providing adequate information.

The exchange, however, stated in its report that SEC probes would not have a "substantial adverse effect" on its financial situation.

Written by
Chiagoziem Bede Ikwueze

The US Securities and Exchange Commission (SEC) is investigating Coinbase Global Inc. for its staking programs, which allow users to receive rewards for holding specific cryptocurrencies.

Coinbase confirmed this news in its quarterly report stating,

"The company has received investigative subpoenas and requests from the SEC for documents and information about certain customer programs, operations, and existing and intended future products." 

In the report dated August 9, Coinbase stated that the government regulatory agency sent a voluntary request for information in May. The request seeks to look into various areas of the exchange, including Coinbase's staking programs, asset-listing process, asset classification, and stablecoin products. 

For now, Coinbase is unsure if the probe would lead to a formal investigation.

Coinbase, like many of its counterparts, provides staking services as a key strategy to diversify earnings from trading, which tends to diminish during market downturns. 

This enables users to earn a return on their cryptocurrency holdings by delegating them to assist in verifying transactions and securing the blockchain network.

Revenue from blockchain rewards, mostly from staking, contributed 8.5% of net revenue for Coinbase in the second quarter. However, it also reported a net loss of $1.09 billion in the same quarter, an indication that it took a big hit during the market crash. 

Previous reports also show that the SEC is investigating the crypto exchange for potentially making unregistered securities available for trading. 

These additional inquiries further add to Coinbase's pile of legal and regulatory issues. Aside from that, the corporation is involved in about five legal disputes, some of which have the potential to become class actions, for reasons ranging from misleading clients to not providing adequate information.

The exchange, however, stated in its report that SEC probes would not have a "substantial adverse effect" on its financial situation.

Written by
Chiagoziem Bede Ikwueze