The SEC is currently investigating Coinbase, with the most recent investigation focusing on its staking product.
Coinbase confirmed that the US Securities and Exchange Commission is looking into some of its products, including staking.
This information was disclosed in the exchange’s quarterly report, which stated:
“The Company has received investigative subpoenas and requests from the [U.S. Securities and Exchange Commission] for documents and information about certain customer programs, operations, and existing and intended future products, including the Company’s processes for listing assets, the classification of certain listed assets, its staking programs, and its stable coin and yield-generating products.”
According to a letter sent to Coinbase shareholders on August 9, the regulator sent the company a voluntary request for information in May. However, it is unclear whether the investigation will be formalized.
According to the letter: “[Coinbase] regularly gets formal and informal questions from regulators about our views on the development of the crypto economy, our products, and our operations.”
Coinbase staking is a fast-growing business for the company
Staking has also been identified as a high-growth area by the company, which recently announced that it will offer Ethereum (ETH) staking to institutional investors.
Coinbase, which reported a $1.09 billion net loss in the second quarter, has been struggling due to, among other things, the market crash. Staking commissions accounted for 8.5% of revenue in the second quarter, declining at a slower rate than trading revenue. The SEC’s scrutiny of the product may impede its development.
Coinbase and SEC
Meanwhile, these new investigations merely add to Coinbase’s mountain of legal and regulatory issues. The SEC is also looking into the exchange’s trading of unregistered securities.
Aside from that, the company is involved in about five legal cases, some of which have the potential to become class actions, for reasons ranging from misleading customers to not providing enough information.
The exchanges, however, stated in its filing that SEC investigations would not have a “material adverse effect” on its financial conditions.
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