Coinbase International news

Coinbase CEO says SEC’s notice wasn’t entirely unexpected

  • Coinbase disclosed a Wells Notice from the US Securities and Exchange Commission (SEC).
  • A Wells Notice usually comes before an enforcement action.
  • Coinbase CEO Brian Armstrong says the company isn’t surprised with the SEC’s move.

Coinbase CEO Brian Armstrong has commented on the company’s announcement that it had received a Wells Notice from the US Securities and Exchange Commission (SEC), saying via Twitter Spaces that the exchange wasn’t entirely surprised at the regulator’s action.

Coinbase had 30 meetings with SEC, without feedback

As reported on CNBC on Friday morning, Armstrong and other executives say they had engaged with the SEC before.

Over a series of 30 meetings in the last nine months, we met with the SEC and shared details of the business and answered every question,” the Coinbase CEO said.

According to Armstrong, Coinbase spent millions of dollars in legal fees as they tried to explain everything about its business, including digital asset listings and staking rewards. He added that the SEC did not provide feedback over the nine months, noting that the agency cancelled, at the last minute, a meeting it had set up for that purpose.

That was the first feedback we got in 30 meetings. The day before that meeting they cancelled the meeting [and] we didn’t know why. And then a few weeks later – boom, we get served with the Wells Notice,” he added.

On Thursday, Armstrong tweeted that the SEC reviewed Coinbase’s business and approved its IPO. 

Coinbase stock plummets 

The Wells Notice is a signal that the securities regulator is considering enforcement action against the largest US-based cryptocurrency exchange. Accordingly, investor reaction to the news saw the publicly-listed company’s shares plunge to lows of $61.87.

The Coinbase stock was down nearly 15% over the past five days.

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Coinbase stock down 25% as regulators move in and crypto environment worsens again

Key Takeaways

  • Coinbase was issued with a Wells notice this week and now awaits formal charges from the SEC
  • Regulators continue to move in on US crypto companies, hurting Coinbase’s prospects
  • The exchange laid off its second round of employees in January, shut down activities in Japan due to “market conditions”, and saw its share price plummet throughout 2022

Coinbase just can’t catch a break. 

I wrote a deep dive on the struggling crypto exchange last October, when founder and CEO Brian Armstrong sold 2% of its stake. But things have only gotten worse since then. 

It laid off 20% of its workers in January (I analysed what this meant for the company here), six months after it had already cut 18%. It also terminated its Japanese operations in January, citing “market conditions”. 

Despite this, the stock had been rebounding in 2023 as a softer forecast of the future path of interest rates was benefitting the tech sector at large. And then, the SEC waded in to end the party this week. 

SEC alleges Coinbase is violating securities law

The SEC issued Coinbase a Wells notice, warning that it was potentially violating US securities law. The share price has fallen 24% in the two days since.  

“Based on discussions with the Staff, the Company believes these potential enforcement actions would relate to aspects of the Company’s spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet,” Coinbase said in a regulatory filing. “The potential civil action may seek injunctive relief, disgorgement, and civil penalties.”

The market now awaits the exact charges becuase a Wells notice, as Armstrong noted in his tweet above, typically precedes legal action. 

Coinbase chief legal officer Paul Grewal also waded in, noting that Coinbase was confident in the face of the charges. 

“Although we don’t take this development lightly, we are very confident in the way we run our business – the same business we presented to the SEC in order for us to become a public company in 2021,” he posted. 

Regulatory environment continues to worsen for crypto

Despite Coinbase’s defiance, at least in public, the reality is that this marks just the latest move by US regulators to clamp down on crypto. 

Recent months have seen the dramatic shutdown of the Binance-branded stablecoin BUSD, a top 10 cryptocurrency, a fine for leading exchange Kraken relating to disclosures around its staking problem, and now this Wells notice for Coinbase. 

Then there is the banking turmoil. While not caused by crypto, the shutdown of SVB, Silvergate and Signature means the main crypto banks have evaporated into thin air. That starves the industry of vital fiat on-ramp and is an unquestioned headwind going forward. 

Whether you view any of the above as unfair or not, the bottom line for Coinbase is that the country in which it is headquartered, the United States, is a significantly more hostile environment for the crypto industry than it was a few months ago. That is obviously bad news for investors, and for the business as a whole. 

What happens next?

Going forward, it is hard to know what will happen. It does appear, however, as if regulators are intent to rein crypto in after the series of scandals that shook the market (and caused billions of losses for customers) last year, including LUNA, Celsius and most recently FTX. 

Before this latest move, the Coinbase share price had been reaping the positivity around a bounceback for Bitcoin, which is currently trading at $28,000, nearly double what it was in the aftermath of the FTX collapse in November. 

That follows the wider tech resurgence, as the market is betting that the Federal Reserve is largely done with interest rate hikes and the uber-tight monetary policy of the last year. 

Ultimately, Coinbase’s fate will be tied to those macro conditions, as well as the Bitcoin price, as it always is. But so too will it depend on regulators pulling back from their punitive stance over the last few months, and right now that doesn’t appear likely. 

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Coinbase says ETH unstaking requests may take weeks or months to process

  • Staked ETH withdrawals are being processed on Ethereum Goerli Testnet ahead of the Shanghai upgrade.
  • Coinbase has said it expects demand for ETH unstaking to surge after the Shanghai upgrade.
  • The exchange has however said the ETH unstaking requests might take weeks or months to process.

Ethereum developers have set a target date of April 12, 2023, for the long-awaited Shanghai upgrade during the “All Core Developers Execution Layer #157 call” held on Thursday. Staked ETH withdrawals have already started being processed on Ethereum Goerli Testnet ahead of the Shanghai upgrade.

The upcoming Shanghan upgrade has caused a lot of anticipation among ETH stakers who have had their ETH tokens locked up since Ethereum announced plans for the Merge upgrade that moved it from a proof-of-work (PoW) blockchain to a proof-of-stake (PoS) blockchain. For this reason, Coinbase expects the ETH unstaking demand to be through the roof once the Shanghai upgrade goes live.

Unstaking requests to take weeks or months

Coinbase has stated that the ETH unstaking requests on its platform could end up taking weeks or months to process. This is mainly because Coinbase will not be the one processing the unstaking process. Staking requests are processed on-chain, and Coinbase will only act as a channel to pass unstaked ETH to users once the tokens are released by the protocol.

The Merge upgrade allowed staking providers like Coinbase to allow users to stake ETH on their platforms without the ability to withdraw the staked tokens.

After April 12, those who have staked ETH on platforms like Coinbase will be able to withdraw the staked Ether while also continuing to stake more ETH without being subjected to an indefinite lockup period.

All Coinbase users will be able to unstake their ETH once the Shanghai upgrade goes live.

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Ark Invest adds $20.5M Coinbase shares: COIN share price down 7%

  • Ark Invest purchased 301,347 Coinbase shares on Thursday.
  • Ark had purchased more Coinbase shares on Wednesday.
  • In February Ark purchased $30 million worth of Coinbase shares.

Cathie Wood’s Ark Invest has remained bullish on Coinbase Global Inc (NASDAQ:COIN) stock despite the stock dropping by more than 10% since the beginning of March. On March 10, 2023, Coinbase shares were going for $64.67 compared to today’s price of $58.09.

According to its latest trade filing, Ark Invest on Thursday added 301,437 Coinbase shares to its Ark Innovation ETF and 52,525 Coinbase shares to Ark Next Generation Internet. The total value of shares purchased by Ark on Thursday amounted to $20.5 million.

Ark Invest also added 265,000 Robinhood shares (worth about $2.5 million), which were solely added to the Ark Next Generation Internet ETF.

Ark invests in Coinbase amid the crypto meltdown

While many are sceptical about crypto-related firms amid the current crypto market meltdown, Cathie Wood seems quite optimistic about Coinbase, which could be seen as a vote of confidence on the crypto exchange.

While several cryptocurrency exchanges are facing accusations by various regulatory authorities in the United States, Coinbase has continued to receive some considerable edge. For example, the US government recently reportedly moved BTC worth $217 million to Coinbase. The collapse of crypto-friendly bank Silvergate, the shockwaves caused by crypto VCs-friendly Silicon Valley Bank selling assets and stock to raise funds, and the risk of prolonged interest rate increases in the US have driven down market sentiment this week.

In February Ark purchased Coinbase shares worth more than $30 million adding to another $3.2 million worth of Coinbase shares purchased in December.

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The US government needs to provide a clear regulatory framework for crypto, says Coinbase’s CEO

  • Brian Armstrong believes that the US government needs to provide a clear regulatory framework for cryptocurrencies.

  • He added that offshoring crypto hurts the American financial system.

  • Armstrong argues that the traditional financial system hasn’t been updated in nearly four decades.

Crypto needs a clear regulatory framework

Brian Armstrong, the CEO of cryptocurrency exchange Coinbase, told CNBC in a recent interview that the United States government needs to provide a clear regulatory framework for the cryptocurrency industry.

This latest cryptocurrency news comes after he published an Op-ed piece on CNBC on Wednesday, March 1st. When asked about regulating cryptocurrencies in the US, Armstrong said;

“I think new legislation is needed. The reason is that if you ask most Americans, 80% of them think that the current financial system doesn’t work for them. The fees are too high, the delays are there, and it doesn’t serve everybody equally. This is not surprising because the current financial system is built on a 40-year-old technology. Some of the laws have been there for a hundred years, even before the internet existed.”

Moving crypto offshore could hurt the United States

Armstrong believes that cryptocurrency is the most important technology that can update the current financial system. He added that there is currently strong bi-partisan support for crypto legislation, and that is a positive thing for the industry. He added that;

“Everybody saw what happened with FTX and are now working to ensure that we have strong customer protection. We have to recognise that there is innovation potential in the industry and have to ensure that, unlike 5G and semiconductors, we don’t move the crypto industry offshore. We need this to be built here in America, with strong consumer protection.”

In his Op-ed, Armstrong pointed out that the US needs to attract some of the biggest players in the crypto industry. He wrote that;

“The U.S. government needs to take a more proactive approach to cryptocurrency and provide a clear regulatory framework for the industry, one with forward-looking policies that recognize the many unique and innovative aspects of blockchain technologies. This will create a more stable and secure environment for cryptocurrency to thrive and will help to attract more investment and talent to the US.”

Coinbase is one of the leading cryptocurrency exchanges in the world and is a publicly-listed company in the United States.

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Coinbase to suspend Binance USD trading in March

  • Binance USD has been under scrutiny by the US SEC which claims that it is a security.
  • NYDFS recently ordered Paxos to stop issuing BUSD.
  • Paxos also went ahead to terminate its relationship with Binance.

US-based cryptocurrency exchange Coinbase has announced that it will suspend Binance USD (BUSD) trading in mid-March. The announcement, which was made via Twitter, mentioned “listing standards.”

Coinbase’s decision to suspend BUSD trading comes two weeks after the US Securities and Exchanges Commission (SEC) issued Paxos Trust with a wells notice for issuing a security, the BUSD. SEC’s notice triggered a number of other repercussions including the New York Department of Financial Services (NYDFS) ordering Paxos to halt BUSD issuance which Paxos immediately obeyed

While Binance had initially stated that BUSD was not a security and that it was ready to defend that stand in court, it is not clear what the future of BUSD is especially after Binance recently minted 50 million True USD stablecoins.

BUSD to be suspended on all Coinbase apps

According to the communication, Coinbase will suspend BUSD trading on March 13 starting at around 12PM ET.

The suspension will apply to Coinbase Pro, Coinbase Prime, Coinbase Exchange, and the simple and advanced versions of Coinbase .com. In the meantime, users will have access to their BUSD tokens and they can withdraw them.

The exchange said:

“Your BUSD funds will remain accessible to you, and you will continue to have the ability to withdraw your funds at any time.”

For any digital asset to be listed on Coinbase, it has to be voted for by the digital asset listing group. The voting process is informed by a rigorous vetting/review process that evaluates whether the assets are legal and comply with the technical security standards. There are also additional business assessments and continuous monitoring to ensure that the cryptocurrency continues to meet the set standards.

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Voyager is liquidating assets, including 2.2 trillion SHIB: report

  • Voyager reportedly received $100 million in USDC since 24 February.
  • Crypto assets sold include 2.24 trillion Shiba Inu and over 15,600 Ether.
  • Voyager filed for Chapter 11 bankruptcy in July 2022.

Voyager Digital, the crypto lender that filed for bankruptcy in July 2022 amid broader market contagion, has reportedly been selling some of its assets.

Per on-chain data shared by Lookonchain, the Voyager team has recently sold digital assets through US-based cryptocurrency exchange Coinbase. The company is said to have received roughly $100 million in the USD Coin (USDC) stablecoin for sales of tokens such as Shiba Inu, Ethereum and the native Voyager Token.

Voyager has sold over $100 million in multiple crypto assets

As reported by Lookonchain, Voyager started receiving the USDC on 24 February 2023, with the sales having begun on 14 February. 

The tokens sent to Coinbase include 2.24 trillion Shiba Inu (SHIB) worth $28 million, 15,635 Ether (ETH) worth $25 million and 640,000 Chainlink (LINK) worth over $4.74 million.

Voyager has reportedly also sold 28.5 million of its native token VGX for $12.85 million, 350,000 Uniswap (UNI) for $2.28 million and 3.26 million of Decentraland (MANA) worth $2.15 million. In total, Voyager sold tokens daily, with about 23 crypto assets sent to Coinbase exchange, the on-chain sleuth noted.

As of 25 February, Voyager held roughly $631 million in crypto, including over 172,000 ETH worth about $276 million, $186 million in USDC and over 6.5 trillion SHIB worth about $81 million.

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Optimism price prediction: OP spikes after Coinbase launches Base on OP stack

  • Optimism token OP rose 16% after Coinbase announced the launch of its L2 platform on OP stack.
  • OP price hit highs of $3.10 on Coinbase, not far from its all-time high of $3.19.
  • Gains for the OP token paled in comparison to the staggering 250% spike for BASE, a token unrelated to Coinbase’s L2 Base.

Optimism price surged double digits on Thursday after cryptocurrency exchange Coinbase announced it had launched Base, an Ethereum Layer-2 network.

Like Arbitrum, Optimism is a L2 network that uses Optimistic Rollups to increase transaction speed and reduce gas fees. Its scalable blockchain is one of the top chains in the Ethereum ecosystem.

Optimism price surges 16% on Coinbase news

Sentiment across the OP community flipped bullish as reaction to Coinbase news pushed OP token higher.

According to Coinbase, Base will offer “a secure, low-cost and developer-friendly” platform for people to create, deploy or interact with decentralized apps. The project’s goal is to onboard the next 1 billion or more people into the crypto space, the digital asset platform noted.

Base is built on Optimism’s OP stack, Coinbase announced. 

While the news saw another unrelated cryptocurrency called Base Protocol spike more than 250% amid speculation, the price of Optimism also jumped. However, the native token OP did not rip as much as BASE did, with its price soaring roughly 16% on Coinbase.

OP surged to above $3.00 on most major exchanges that support the cryptocurrency, including $3.10 on Coinbase. 

OP/USD price chart on Coinbase. Source: TradingView

Market activity was also up, with data from CoinGecko showing trading volume rose nearly 90% in the past 24 hours to over $733 million. Alongside the spike in buyside volume is the bullish flip of the relative strength index, which is upturned to suggest bulls are in control.

Optimism price reached its all-time high of $3.19 in early February this year, and with a positive technical outlook in place, it’s likely OP/USD could go on to hit a new ATH. 

Crypto trader and analyst HornHairs says this is likely if Bitcoin and Ethereum prices break above key resistance zones.

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SEC could scrap crypto staking, Coinbase CEO reveals

  • Coinbase CEO Brian Armstrong tweeted saying The SEC could ban crypto staking
  • Armstrong however said that crypto staking is an essential innovation in crypto.
  • The revelation was met with criticism from Charles Hoskinson who said Ethereum staking is problematic.

The co-founder and CEO of Coinbase Brian Armstrong earlier today tweeted revealed that he is hearing rumours that the SEC intends to “get rid” of crypto staking in the US for retail customers.

According to Armstrong, staking is an important innovation in the crypto space since it allows crypto users to participate directly in running decentralized blockchain networks. In his follow-up tweets, he said that crypto staking has brought many positive improvements in the crypto industry including increasing security and scalability and also helping in reducing carbon footprints.

For those new to crypto staking, it is when users lock up their crypto assets for a certain amount of time to help support certain functions of a blockchain including governance and verifying transactions and get some staking rewards in return.

Armstrong’s revelation met with scorn

While some hold the same views as Brian Armstrong, some responded with memes and derision. Charles Hoskinson, the founder of Input Output Global weighed in on the matter saying that “Ethereum staking is problematic.”

Hoskinson argues that giving up assets temporarily to someone else in return for rewards resembles regulated products. He said:

“Slashing and bonds [are] not so good. Non-custodial liquid staking on the other hand is like the mining pools we’ve used for 13 years… It’s sad that all proof of stake protocols might get lumped together due to a fundamental misunderstanding about the actual facts of operation and design.”

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Coinbase pausing creator Drops on its NFT marketplace

  • The exchange however maintained that it is not planning to close its NFT marketplace.
  • It wants to align the exchange’s resources in developing other features.
  • Coinbase has been struggling with revenue generation.

Cryptocurrency exchange Coinbase on Wednesday tweeted that it was pausing creator drops in its NFT Marketplace. The exchange however assured clients that the move is not an overture to the closure of the NFT marketplace.

Coinbase explained that it was doing so to free up resources so that it could focus on other tools and features that creators have requested.

Coinbase has been facing a lot of challenges lately. It cut its workforce by 25% and closed its operations in Japan. It also recently got fined in the Netherlands for operating there without a licence.

Jessica Yatronofsky NFT collection

Coinbase announcement came shortly after one of its NFT partners, Jessica Yatronofsky, announced that her NFT collection would no longer be available on the Coinbase NFT Marketplace. Yatronofsky claimed that she had information that the marketplace would cease to operate as of February; something that is most likely the reason for Coinbase to reiterate it was not closing the Marketplace.

According to Coinbase, the changes will help the development team behind the Coinbase NFT to focus more on improving the platform. A representative from the exchange said that the team will now be able to focus on creating long-lasting solutions to serve its community.

In another tweet, Coinbase said:

“Rest assured, our mission for Coinbase NFT hasn’t changed and we remain optimistic about our future as we continue building. We’re excited to find more opportunities to work with creators in the future.”

Coinbase COIN share price

While there is no concrete reason that has been given by Coinbase for pausing the NFT drops, Coinbase share price has been rising over the last few days.

Yesterday COIN closed the market at $65.70, up +7.22 (12.35%). the stock has gained +9.64 (17.20%) in the past five days.

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