Coinbase Capitalization Soars Despite SEC Lawsuit: Executives Reduce Positions

Lois Zaytsaw
Lois Zaytsaw Crypto
3 Min Read

The Coinbase has seen a spectacular 50% increase in valuation after getting sued by the Securities and Exchange Commission (SEC). It’s interesting to note that at this time, senior executives aggressively decreased their holdings of company stock, including CEO Brian Armstrong.

SEC Lawsuit and Share Price Decline

The Securities and Exchange Commission (SEC) charged Coinbase on June 6 with conducting an unregistered sale of securities through a variety of tokens and mixing many services that are generally performed separately in traditional markets including as operating as a broker, exchange and clearing agency . The Earn staking scheme at Coinbase was also examined by the SEC. The company’s shares fell by 9.1% that day as a result of this and its capitalisation decreased by more than 13.5% .

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Coinbase Counters SEC Lawsuit

In retaliation Coinbase said that the SEC had abused its authority in the litigation. According to the exchange the assets that are specified in the claim do not meet the requirements for investment contracts and therefore not be categorized as securities based on the Howey test . Coinbase noted that it has consistently complied with legal requirements and that it has often sought direct advice from the SEC on how to implement federal securities rules in the digital asset market. Due to the litigation the company adamantly refused to change its operating strategy.

Capitalization Rebounds and Positive Catalysts

Surprisingly after the SEC’s measures Coinbase’s shares fully recovered losses. By July 7 the shares had increased in value by 52.5%, from $52.5 to $78.7. The exchange’s capitalisation has surpassed 122% year to date . News of applications for the debut of spot Bitcoin exchange-traded funds (ETFs) is responsible for the upward trend.

On June 30 the Wall Street Journal’s sources said that the SEC had rejected certain ETF applications because they lacked details on the joint surveillance agreement which is an essential component of BlackRock’s plan. The next day according to a Bloomberg report Invesco, VanEck, 21Shares, WisdomTree and Fidelity had revised their SEC filings to meet the regulator’s concerns . Notably Coinbase’s support for collaborative oversight was stated in the submissions from these businesses.

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Lois Zaytsaw
By Lois Zaytsaw Content Editor, Financial Writer
Meet Lois, a dynamic Crypto, Blockchain, and Finance Writer/Journalist based in the bustling metropolis of New York City. With a passion for technology and a keen understanding of finance, Lois has been covering the latest developments in the world of cryptocurrency and blockchain for several years. Her insightful articles have been featured in numerous leading publications, including The Wall Street Journal, Bloomberg, and CryptoBriefing. Lois' fascination with blockchain and cryptocurrency began during her time as a student at university, where she studied economics and computer science. She was drawn to the disruptive potential of blockchain technology to revolutionize the traditional financial industry, and since then, she has been following the latest trends and innovations in the space.
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