Coinbase shares tumble after report that it’s facing SEC probe

People watch as the logo for Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, is displayed on the Nasdaq MarketSite jumbotron at Times Square in New York, U.S., April 14, 2021.

According to reports, the SEC is looking into whether the platform is offering securities that are not registered.

The stock of the company has lost a lot of money this year.

CNBC has learned that the U.S. Securities and Exchange Commission is looking into the legality of the company allowing users to trade digital assets that aren't registered as securities. The news was first reported by the news agency.

The SEC has already reviewed the process that keeps securities off the platform, and we are confident that it keeps them off. We are going to engage with the SEC on the matter.

The SEC probe was unrelated to the fraud charges against the ex-Coinbase product manager and two other people. The SEC filed a complaint the same day that claimed nine of the 25 token were securities.

There is a debate over how to classify cryptocurrencies. Cryptocurrencies are regulated by the Commodity Futures Trading Commission. Many projects are funded by the sale of coins. Many of the underlying token have the attributes of securities, and need to be regulated as such to protect investors.

The SEC wrote in its lawsuit against the alleged insider trading scheme that a digital token is a security if it meets the definition of a security.

The SEC has lawsuits against other firms.

Compared to other companies, Coinbase is more careful with its token listing. According to CoinGecko data, there are over 200 such token listings.