Category: COIN

Coinbase
COIN
(NYSE: COIN) began its publicly traded existence on April 14th, 2021 as a hot initial public offering that cryptocurrency freaks could not stop talking about.

There was more than the usual amount of “this one’s going to the moon!” free and sometimes paid-for advice that typifies a certain type of IPO no matter what the era or the industry. The certainty of success seemed obvious to the many who participated.

When the stock was issued at a price of $250 — which got filled, by the way, by few investors — an immediate at-the-open rally took it up to $381 within minutes and then to a quick blast up to $424, a peak never to be seen again.

Coinbase since then is an example of almost relentless selling as the crypto world it represents entered what those enthusiastic about it took to calling “winter” — although some have noted that it’s lasted almost as long as an ice age, so far.

This week’s news that the Securities and Exchange Commission sent a Wells notice to Coinbase probably puts an end to any leftover hyper-enthusiasm for the stock. The government regulatory agency sends the notice to let a publicly traded company know that it intends to bring enforcement actions.

Are cryptos actually securities that must be registered with the SEC or not? That’s the basic underlying question and Coinbase lawyers will be working hard to prove the government should go away. The question of staking is in the legal mix.

Investors can’t be thrilled that the company is the recipient of such a “heads up, we’re coming after you” from the SEC and sellers unloaded again this week.

Here’s the daily price chart for Coinbase Global:

The Thursday and Friday selling that followed the Wells Notice did not take the stock all the way back down to the late December, 2022/early January lows. The price is still above both the 50-day and the 200-day moving averages but remains below the down trend line connecting the August, 2022 high and the mid-March, 2023 high.

It’s semi-impressive that Coinbase held up as well as it did after receiving the notice but a close below the most recent low of $50 would be a problem.

The weekly chart for Coinbase Global looks like this:

You can see how the stock never made it back to the peak of the IPO session and has generally followed the path of the well-known cryptocurrencies’ downward trend. It looked as if Coinbase would make it above the 50-week moving average but that is now called into question, a negative from a price chart analysis look.

For a different perspective, here’s the point-and-figure chart for Coinbase Global:

With this type of chart look you get a better sense of just how far the stock has fallen and just where the support levels exist ($51 and $32).

Not investment advice. For educational purposes only.

NEW YORK, March 25, 2023 /PRNewswire/ — Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Coinbase Global, Inc. (“Coinbase” or the “Company”) (NASDAQ: COIN).

If you suffered losses exceeding $50,000 investing in Coinbase stock or options and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/COIN.

There is no cost or obligation to you.

Faruqi & Faruqi is a leading minority and Woman-owned national securities law firm with offices in New York, Pennsylvania, California and Georgia.

On March 22, 2023, Coinbase said in a regulatory filing that it received a Wells notice from the Securities and Exchange Commission (“SEC”) stating that SEC staff had made a “preliminary determination” to recommend an enforcement action against the largest U.S. crypto exchange for violations of federal securities laws.

On this news, shares of Coinbase common stock dropped $6.85 per share, or over 8%, to close at $77.14 per share on March 22, 2023.

Attorney Advertising.  The law firm responsible for this advertisement is Faruqi & Faruqi, LLP (www.faruqilaw.com).  Prior results do not guarantee or predict a similar outcome with respect to any future matter.  We welcome the opportunity to discuss your particular case.  All communications will be treated in a confidential manner.

SOURCE Faruqi & Faruqi, LLP

Popular U.S.-based crypto exchange Coinbase may soon find itself in hot water with federal regulators.

The company’s CEO, Brian Armstrong, announced on Twitter Wednesday (March 22) that the exchange has received a Wells notice from the U.S. Securities and Exchange Commission (SEC) tied to Coinbase’s listing of potential unregistered securities across its suite of digital asset products and services.

“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 statement.

Wells notices are not formal charges or lawsuits, but can often lead to them.

Most recently, at least for the digital asset sector, Paxos, a New York-regulated blockchain infrastructure and financial services platform, was issued one.

Paxos sunset its Binance-branded stablecoin product in response to the SEC notice.

Just as the Paxos Wells notice led to the retirement of its BUSD stablecoin, the SEC pressure on Coinbase has reportedly already killed the company’s staking reward product for at least one crypto token, Algorand.

“I woke up this morning to find Coinbase killed rewards … they are evaluating their services in light of recent regulatory scrutiny, and, for that reason, they will no longer support Algo rewards for Retail customers,” tweeted the Algorand CEO.

Coinbase users can still earn staking rewards from the Ethereum, Cosmos, Tezos, Cardano and Solana blockchain, per the Coinbase site.

Read more: Kraken Ends US Crypto Staking After $30M Settlement With SEC

During the company’s most recent earnings call last month (Feb. 21), Armstrong reiterated to investors his firm belief that the exchange’s business did not violate any securities laws, repeatedly emphasizing that neither its staking products nor USDC stablecoin were securities.

“Policy is my top priority for this year,” the CEO told investors.

Coinbase stock is trading down around 12% on the news.

“Two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase runs a rigorous asset review process and has rejected more than 90% of assets that have applied to be listed on the platform,” tweeted Armstrong, linking to a blog post with the title, “We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead.”

As reported earlier by PYMNTS, Coinbase is looking into building a new crypto marketplace outside the U.S., as frustration grows on both sides between the crypto industry and the government.

“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,” the company stated.

As reported by PYMNTS, the recent months have not been kind to crypto.

The events that come next following the Coinbase Wells notice will be watched closely by the crypto community, as they may lead to more regulatory clarity around just which, if not all, of crypto’s services fall under and are subject to U.S. securities laws.

Topline

Cryptocurrency exchange Coinbase announced Wednesday it received a notice from the Securities and Exchange Commission warning that regulators have identified possible violations of securities law, in the latest legal snarl for the crypto giant.

Key Facts

Crucial Quote

“Our industry continues to see new, conflicting statements from regulators instead of actual rules,” Grewal claimed.

Key Background

Regulators have scrutinized crypto exchanges much more closely as of late after the crash in crypto prices combined with alleged illegal behavior by top industry figures led to a series of high-profile failures, capped by FTX’s collapse in November and the subsequent arrest of founder Sam Bankman-Fried on fraud charges. Coinbase has been under SEC investigation since last summer amid a broader SEC crackdown on unregistered securities, though the company insists none of the crypto products or services it offers can be considered securities—a tightly regulated asset class including traditional investments like stocks and bonds. SEC officials have argued cryptocurrencies should be considered securities since many crypto holders view coins as an investment vessel, rather than a currency to be exchanged. Last month, the crypto crackdown ensnared rival exchange Kraken, which agreed to pay $30 million and stop offering “staking” services—which offer users a return if they allow their crypto assets to be used to validate blockchain transactions—in a settlement with the SEC. The agency accused Kraken of selling unregistered securities, though Coinbase argued this week its staking services shouldn’t count as securities.

Big Number

$100 million. That’s how much Coinbase agreed to pay New York regulators in a January settlement over allegations it let users open accounts without sufficient background checks, which may have encouraged money launderers to use their Coinbase accounts in illicit schemes.

Tangent

Nikhil Wahi, the brother of former Coinbase product manager Ishan Wahi, pleaded guilty last year in the first-even insider trading case involving a crypto firm. Wahi admitted to profiting based on knowledge about coins that Coinbase agreed to list on the exchange before plans were publicly announced.

Further Reading

FTX Files For Bankruptcy—Former Billionaire Sam Bankman-Fried Resigns As CEO (Forbes)

Sam Bankman-Fried Charged With Eight Criminal Counts—Including Wire Fraud And Campaign Finance Violations (Forbes)

Brother Of Ex-Coinbase Manager Pleads Guilty In First-Ever Crypto Insider Trading Case (Forbes)

Coinbase Will Pay $100 Million After Regulators Find ‘Significant Failures’ Heightened Risk Of Criminal Activity (Forbes)

Coinbase partnered with traditional banking giant Standard Chartered to let Singapore users move funds to and from their accounts through any local bank for free, the company said in the announcement. The free transfers come less than a year after Coinbase obtained a license to provide services in the crypto-friendly city-state.

Coinbase Teams Up With Standard Chartered to Provide Free Bank Transfers in Singapore

Coinbase will enable retail customers in Singapore to transfer funds to and from their accounts through any local bank at no cost, the crypto exchange announced on Wednesday. The move, amid a tumultuous period for traditional and crypto banking sectors, marks another effort by Coinbase to facilitate investing in digital assets.

The free transfers, in Singapore dollars (SGD), come from Coinbase’s strategic partnership with the traditional banking giant Standard Chartered. Until now, Singapore-based users could buy cryptocurrencies only through a Visa or Mastercard debit or credit card or transfer crypto in and out of their Coinbase accounts.

“Effective immediately, customers in Singapore can easily transfer funds to and from their Coinbase account using any local bank in Singapore for free. This means you can easily cash in or cash out of your Coinbase account using bank transfers, giving you more flexibility and control over your assets.”

– Coinbase said in the blog post.

In addition, Coinbase has also announced the addition of a 2-click user sign-up system through the integration of Singpass – a digital identity solution used by more than 4.2 million local customers.

US Crypto Companies Struggle to Maintain Fiat On-Ramps Amid Recent Collapses

As Coinbase ramps up its Singapore retail offerings, the crypto industry in the US has lost numerous on- and off-ramps amid recent havoc in the US crypto and traditional banking sectors. Last week, major crypto-friendly banks Silvergate Capital and Signature Bank were shut down, resulting in crypto companies and users struggling to move their assets.

With the collapses, some traditional banks are closing down their crypto operations, and crypto exchanges are watching their fiat pipelines dry up, placing their US deposit features at risk. This is because these banks let crypto traders and institutions “deposit, transfer and convert fiat currency into digital assets,” said Mina Tadrus, CEO of quant investment management firm Tadrus Capital.

Meanwhile, concerns over traditional banking and expected February inflation data boosted Bitcoin and other crypto prices on Tuesday. Bitcoin breached the $26,000 mark during the day, though it lost most of its gains yesterday and currently trades at $24,736.

This article originally appeared on The Tokenist

• A Coinbase user is suing the exchange to recover 90% of his life savings that he says was stolen from him, lawsuit claims.
• The user said Coinbase won’t reimburse him and it sees the breach as his problem.
• But the exchange ignored several red flags for fraud, he alleges in his claim for triple damages.

A Coinbase customer said he lost $96,000 in a phone hack — and now he’s suing the US’s largest cryptocurrency exchange after being told the breach was his problem.

In his lawsuit filed Monday, New York resident Jared Ferguson said 90% of his life savings were wiped out on the platform in a security breach via his phone.

The hackers drained the crypto from Coinbase’s platform within eight hours of tricking his mobile service provider into handing over control of his phone number, according to the filing.

But the exchange has said it won’t reimburse Ferguson and said in an email that customers are responsible for any activity that occurs when devices or passwords are compromised, according to the suit.

“Coinbase’s email disclaimed any responsibility for the hacking of its customers’ accounts,” the filing read.

“Please note you are solely responsible for the security of your e-mail, your passwords, your 2FA codes, and your devices,” the exchange said, according to the filing.

Ferguson said his carrier told him in May it had received a SIM card change request, which he hadn’t made. He discovered the Coinbase theft the next day when he restored service to his iPhone.

Scammers using SIM swap fraud take advantage of 2-factor authentication (2FA), where banks and other service providers send a text message to their customer’s phone to confirm activity on an account. They get a carrier to activate a SIM card on a new device for the customer’s number, which lets them go through all the checks successfully.

In his complaint, Ferguson said he immediately contacted the exchange to report the hacking, but alleges its procedures fall down by failing to be alert to obviously fraudulent and unauthorized transactions.

The exchange ignored several red flags for fraud during the theft, he said, such as the use of a new device and password reset, and that it didn’t use the facial recognition he had put in place.

“Coinbase’s willful blindness to the many badges of fraud present here constituted bad faith acceptance of the unauthorized payment orders,” the lawsuit said.

It’s not the first time Coinbase has seen complaints from customers who lost money on their accounts in a SIM swap scam. One Indiana man lost $7,200 from their account in 2021 but failed to get his money back, CBS reported, noting it had been reporting on similar Coinbase hacks for months.

Coinbase did not respond to Insider’s request for comment.

Ferguson is seeking a full refund plus interest, statutory and punitive damages, including triple damages. 

Coinbase has acquired One River Digital Asset Management (ORDAM) to offer institutional clients investment advice.

The purchase, announced Friday (March 3), is designed to further Coinbase’s “goal of bridging the gap between institutions and the cryptoeconomy,” the cryptocurrency company said on its blog. It comes as Coinbase is increasing its focus on regulation as the industry faces increased pressure from federal authorities.

As part of the deal, ORDAM — a subsidiary of One River Asset Management — will be rechristened Coinbase Asset Management.

The two companies have worked together before, with ORDAM using Coinbase Prime for investment solutions under a partnership announced last year, as PYMNTS reported.

“Coinbase and ORDAM share an ethos grounded in prudent risk management, a trait which has enabled both firms to successfully navigate the recent market turmoil,” the announcement said. “Culturally, our two organizations are strongly aligned on pursuing the opportunity in digital assets with an uncompromising priority on safety and soundness.”

During a conference call with investors last month, Coinbase CEO Brian Armstrong said that — in addition to expanding crypto’s worldwide user base to 1 billion — the company was focusing on regulation.

“Policy is my top priority for this year. … Coinbase has an important role to play around crypto education, advocacy, and policy,” Armstrong said, telling investors he had been spending a lot of time in D.C. working alongside legislators.

“There’s a lot of excitement about the potential and desire to have this built here in America by people who realize the U.S. is a little bit behind right now,” he added. “The EU has already passed comprehensive legislation, and policymakers are seeing others that are moving in that direction. There’s a lot of bipartisan support for getting legislation passed.”

But despite Armtrong’s hopes for crypto legislation in the U.S., PYMNTS has argued recently that the sector faces an increasingly uncertain future.

Last week, the British banks HSBC and Nationwide Building Society announced a ban on cryptocurrency purchases using credit cards for their retail customers, as well as tougher restrictions on debit-card purchases of crypto, with a new daily limit of £5,000.

And in the U.S., the Securities and Exchange Commission (SEC) is keeping up its pressure on the digital asset industry by warning investment advisers that cryptocurrency trading and lending platforms are not qualified custodians.

“When these platforms fail — something we’ve seen time and again — investors’ assets often have become property of the failed company, leaving investors in line at the bankruptcy court,” SEC chair Gary Gensler said Thursday (March 2).

PYMNTS Data: Why Consumers Are Trying Digital Wallets

A PYMNTS study, “New Payments Options: Why Consumers Are Trying Digital Wallets” finds that 52% of US consumers tried out a new payment method in 2022, with many choosing to give digital wallets a try for the first time.

Crypto exchange Coinbase announced it bought One River Digital Asset Management (ORDAM), marking its latest move to boost institutional crypto adoption. ORDAM will operate as an independent business and a wholly-owned subsidiary of Coinbase under a new name – Coinbase Asset Management.

ORDAM to Operate as Coinbase’s Independent Business

Coinbase announced it had acquired ORDAM, a digital asset management firm that serves institutional investors. As a result of the acquisition, ORDAM will be renamed Coinbase Asset Management (CBAM) and will operate as Coinbase’s independent and wholly-owned subsidiary.

“An SEC-registered investment adviser, ORDAM will form the foundation of Coinbase Asset Management and offer investment advisory services to a range of new and existing institutional clients.”

– Coinbase stated in the announcement.

The move comes as part of Coinbase’s plan to bridge the gap between institutional investors and the crypto economy, the exchange added in the announcement. Greg Tusar, Coinbase’s head of institutional product, said the acquisition aims to bring “more institutional capital into the world of crypto.”

Founded by macro trader Eric Peters, ORDAM is a crypto asset manager that focuses solely on serving institutional clients. Such a business model, which completely avoids retail investors, allows the firm to concentrate on long-term capital and money management while limiting exposure to high volatility in crypto prices.

Peters will retain his role as CEO of Coinbase Asset Management and One River Asset Management, the parent company of ORDAM. The financial details of the deal were not disclosed.

Coinbase’s Push for Institutional Trading Continues

The buyout of ORDAM represents the latest effort by Coinbase in its push to drive crypto adoption among institutional investors. The crypto exchange reached a landmark deal in August 2022 with BlackRock, the world’s largest asset manager, to offer crypto services to institutional investors.

Last month, Coinbase reported better-than-expected earnings and revenue in Q4 2022, but the report clearly showed how damaging the “crypto winter” has been for the digital assets sector. The company’s fourth-quarter revenue of $600 million exceeded expectations but was down significantly compared to Q4 2021, when the crypto exchange generated $2.5 billion.

While Coinbase’s overall trading volume declined, the financial report highlighted the divergence between the crypto exchange’s retail and institutional volumes. The company’s consumer trading volume stood at $20 billion in Q4, compared to $125 billion in institutional volume.

This article originally appeared on The Tokenist

There’s no denying that the crypto market downturn last year and the ensuing crypto winter have taken a huge toll on Coinbase Global (COIN -1.50%), which is down significantly from its 52-week high of $206.79. 

Although Coinbase reported better-than-expected quarterly revenue and earnings in February, the underlying metrics look bleak: Transaction volume is down, monthly active users are down, and there is no clear signal yet that retail investors are ready to return to the Coinbase platform.

That’s why I’m excited about the latest innovation from Coinbase: the launch of a new Layer 2 scaling solution for Ethereum (ETH -4.96%) called Base. This could be a way to change the narrative around Coinbase and convince investors to rethink the company’s growth prospects.

What is Base?

According to Coinbase, Base will be a secure, low-cost, and developer-friendly blockchain enabling anyone to build decentralized applications on top of it. It was built using open-source blockchain technology from Optimism (OP -5.00%), another Layer 2 scaling solution for Ethereum. Unlike Optimism, however, Base will not have a native token of its own.

Image source: Getty Images.

Coinbase has also signed up to become a core developer of the Optimism blockchain ecosystem, and has said that Base will eventually be interoperable with Layer 1 blockchains other than Ethereum, including Solana (SOL -4.14%). In fact, Coinbase says the ultimate vision is for Base to become part of a “superchain” that completely integrates Optimism, Base, and a host of smaller Layer 2 scaling solutions.

What are Coinbase’s plans for Base?

There’s clearly a bigger picture here. Why would Coinbase go to all the time and expense of building an entirely new Layer 2 blockchain if there weren’t some future payoff? One idea is that Coinbase could use Base to create a decentralized finance (DeFi) portal for large institutional investors. 

In layman’s terms, Coinbase would carve out a specific portion of the Base blockchain for customers and make it entirely safe and easy for large institutional investors to access new DeFi protocols.

From my perspective, this move into DeFi could eventually be as big as the BlackRock (BLK 0.79%) partnership that Coinbase signed last year. As part of that partnership, Coinbase made it possible for large institutional investors to buy and sell crypto safely and easily.

So the Base blockchain project can be viewed as a potential sequel to this. First, give large pension funds and endowments the ability to buy and sell crypto safely, and then make it possible for them to access the full world of decentralized finance.

This could be really big. People think about Coinbase as a retail crypto company, but its future could be with institutional investors. In short, people might be dumping Coinbase stock now because they’ve given up on the cryptocurrency exchange ever bringing back its retail client base. But they could be overlooking the fact that Coinbase is making a huge play to attract deep-pocketed institutional investors.

Reasons to be skeptical

That being said, there are plenty of reasons to be skeptical about Base. One reason is that Base is still in “testnet” mode, which means it’s not yet ready for prime time. And there are plenty of Layer 2 scaling solutions out there, including Polygon (MATIC -3.64%), so developers might not be willing to move over to Base.

Another reason is that it will take time to build any type of DeFi portal for institutional investors, so there won’t be any immediate results to see. This might explain why Coinbase shares are only up 6% since the unveiling of Base.

Lastly, Coinbase doesn’t exactly have a stellar track record of launching big, splashy products. Remember when the launch of a non-fungible token (NFT) marketplace on Coinbase was supposed to be a big deal? Nearly one year later, there’s already talk of Coinbase pulling the plug on the project.

Should you buy Coinbase?

If you think Base has the potential to be big, there are several different options available. You could choose to invest in Coinbase as a long-term growth play, confident in the ability of Base to bring in serious institutional money to the Coinbase platform.

Or you could choose to invest in the Optimism ecosystem, which is what a lot of people are doing right now. Optimism tokens related to decentralized finance are on fire right now.

Or, you could choose to invest in Ethereum. Layer 2 blockchains such as Base and Optimism would not exist if it were not for Ethereum, which is still the premier Layer 1 blockchain for DeFi.

At the end of the day, I’m with Cathie Wood of Ark Invest when it comes to Coinbase. I think the company is still a great long-term play on the future of the crypto industry. The launch of Base might not produce immediate results, but it’s the long-term vision here that’s so attractive if you’re investing for the long haul.

Following a relentless regulatory assault on the Binance-branded stablecoin, Coinbase, the largest US-based cryptocurrency exchange, announced it would suspend BUSD trading in mid-March. The Paxos-issued token became the target of both the SEC and the New York Department of Financial Services (NYDFS) earlier in February.

Coinbase to Halt BUSD Trading

Through its Coinbase Assets Twitter account, Coinbase announced on Monday it would suspend BUSD trading on March 13th.  According to the exchange’s post, the stablecoin no longer meets its listing standard. The suspension will affect users on Coinbase Pro, Coinbase Exchange, and Coinbase Prime, and both simple and advanced trade.

Binance-branded BUSD, as well as its issuer, found itself under regulatory scrutiny in mid-February when the NYDFS ordered Paxos to stop mining the stablecoin claiming the company was unable to continue doing so “safely”. Around the same time. Paxos revealed it had received a Wells notice from the SEC alleging that BUSD is an unregistered security.

The regulatory actions led to the end of the relationship between Paxos and Binance. Furthermore, the exchange’s CEO Changpeng Zhao already hinted that his company would be moving away from BUSD but stated that the events would have little consequence for his firm as it was not particularly reliant on the stablecoin.

Coinbase Continues Building Despite Regulatory Pressure

Not unlike many other cryptocurrency businesses, Coinbase found itself under increased pressure throughout 2022, as well as in the first months of 2023. The company’s Q4 earnings report showed a significant drop in its user base and revenue, and the SEC’s recent settlement with Kraken surrounding its staking service caused a great deal of concern with regard to Coinbase’s offering.

Coinbase, has, however, also so far proved its resilience despite the turmoil affecting the crypto industry. Soon after its Q4 report came out, the exchange revealed it had a strong January and is well on track to continue its growth in the first months of 2023. Furthermore, Coinbase also reacted to the enforcement action targeting Kraken by explaining, without ambiguity, that its offering is fully compliant and not in danger of being targeted by the SEC.

The exchange also continued expanding its offering despite the turbulence. On February 21st, it announced it would list the euro-backed stablecoin EUROC and offer EUROC-USD, and EUROC-EUR trading pairs as soon as sufficient supply has been established. A perhaps even more exciting development came on February 23rd when Coinbase revealed it had partnered with Optimism to create Base, an Ethereum L2 platform built for the creation of decentralized apps.

This article originally appeared on The Tokenist