Coinbase Shares Plummet 11% Following SEC Notice

On Thursday, March 23, shares of American cryptocurrency exchange Coinbase fell 11% to $68.7 per share during pre-market trading on NASDAQ. The sell-off occurred after Coinbase announced that the U.S. Securities and Exchange Commission (SEC) had issued a potential violation of U.S. securities law warning to the company. Investors responded with mass selling.

Coinbase stated that it was disappointed with the decision of the American regulator and confident in the legality of its assets and services. The exchange assured that its services continue to operate normally. However, according to Bloomberg, such notifications from the SEC often, but not always, result in lawsuits, settlements, and fines for companies.

Representatives of Coinbase have met with the SEC more than 60 times over the past nine months to try to resolve issues with the regulator, but these negotiations have not been productive, the agency reported, citing unnamed sources. The SEC has stepped up efforts to regulate the crypto industry since the collapse of the FTX cryptocurrency exchange in November 2022. Due to liquidity issues, FTX filed for bankruptcy, resulting in investors incurring billions of dollars in losses.

Coinbase Global is an American cryptocurrency exchange founded in 2012. In April 2021, the company went public through a direct listing and became the first cryptocurrency exchange traded on the stock market. Compared to its historical high in November 2021, shares have fallen by more than 70%.