Coinbase blasts SEC over insider trading case, says none of the tokens it lists are securities

Coinbase signage in New York’s Times Square during the company’s initial public offering on the Nasdaq on April 14, 2021.

Following fraud charges against a former employee, the company pushed back on claims from the SEC that it offers unregistered securities.

Three people were charged Thursday with wire fraud in connection with a scheme involving cryptocurrencies. The case is unique.

The individuals were accused of scheming to profit from the listing of the new token on the platform.

The SEC said that nine of the 25 token were securities.

Paul Grewal denied the claims in a post on Thursday. It's over.

The seven assets included in the SEC's charges are listed on the platform of another company. Assets aren't securities.

The SEC reviews the process of analyzing and reviewing digital assets before they are made available on the exchange.

The issue of whether cryptocurrencies should be considered securities has flustered both regulators and firms.

The SEC has filed a lawsuit against the San Francisco-based firm, claiming that it should be considered a security.

The Howey Test is a Supreme Court case that considers an asset as a security if certain criteria are met. The SEC defines a security as an investment of money in a common enterprise with a reasonable expectation of profit.

As a result of the SEC position, some of the Cryptocurrencies it offers may be forced to be classified as regulated financial instruments.

Disclosure and registration are required for the process of listing securities. Cryptocurrencies are unregulated and don't have the same level of scrutiny.

Some other exchanges have a more conservative framework for their token listings. According to CoinGecko data, both Binance and FTX have more than 300 coins.

The company is accused by the SEC of hosting unregulated securities on its platform.

The SEC securities fraud charges were called a "striking example of regulation by enforcement" by the Commodity futures trading commission commissioner. The foreign exchange market is regulated by the Commodity Futures Trading Commission.

The SEC's allegations could have broad implications beyond this single case and underscore the need for regulators to work together. Being out in the open gives regulatory clarity.

Grewal also agreed with the assessment.

He said that instead of crafting tailored rules in an inclusive and transparent way, the SEC is relying on these types of one-off enforcement actions to try to bring all digital assets into its jurisdiction.