The stocks of Coinbase, the cryptocurrency exchange, plunged by more than 20% at the open on 6th June. The shares have already gone through some losses, and are currently trading in at a sum of $50.14, which could be compared to the intra-day low of $46.43. The market capitalization for the company currently stands at $13.7 billion.
On the same day, the United States Securities and Commission went on to file a lawsuit against the cryptocurrency exchange, alleging that the operations of a national securities exchange that was unregistered, broker and clearing agency, and having failed to register the offer and sale of the crypto asset.
Coinbase Stock Seems To Be Plunging Following SEC Notice
Along with the announcement made by the SEC, a task force that comprised 10 separate state security regulators from California, Alabama, Illinois, Kentucky, Maryland, South Carolina, New Jersey, Vermont, Wisconsin, and Washington put up a Show Cause Order against Coinbase.
The order further alleged that the company had violated the securities law by offering up staking rewards program accounts to the residents of Alabama without registration to actually offer or sell these securities. Under this order, the exchange has around 28 days to respond, and highlight why they shouldn’t be directed to cease and desist from selling securities that are unregistered in Alabama.
On the 14th of April 2021, the stock of Coinbase debuted on the US Nasdaq exchange. The shares are currently down by 88% from their all-time high of about $435, which was achieved on the day of listing. The exchange also had to file a Form S-1 in order to register with the SEC and gain the approval of the regulator.