Coinbase Shares Drop After SEC Files Lawsuit

By Dean Seal

Shares of Coinbase are trading lower after the largest crypto trading platform in America was hit with an enforcement action from the U.S. Securities and Exchange Commission.

The stock is down 16.5% at $49 in premarket trading. When the market closed Monday, shares were up by nearly two thirds since the start of the yearb but down 17% over the prior 12 months.

Wall Street's top regulator alleged in a New York federal court Tuesday morning that Coinbase is operating as an unregistered securities exchange, broker and clearing agency.

Coinbase has earned billions of dollars in revenue by collecting transaction fees from crypto traders whom it deprived of disclosures and protections afforded by registration with the SEC, the agency said.

The action comes a day after the SEC filed a similar complaint against the global crypto exchange Binance for allegedly flouting U.S. securities laws.

Mizuho analysts said in a note on Tuesday that more than 30% of Coinbase's revenue could be at risk based on the content of the Binance suit, which targets the exchange's crypto-staking program and suggests that alt coins are securities that have to be registered. About 20% of Cobinase's revenue comes from alt coins and another 10% comes from staking accounts.

Write to Dean Seal at [e-mail]

(END) Dow Jones Newswires

June 06, 2023 09:03 ET (13:03 GMT)

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