Coinbase Stock Plunges 20% Amid SEC Lawsuit

On June 6, the stock of cryptocurrency exchange Coinbase fell more than 20% at the open.

At the time of publication, shares have recouped some of their losses and are trading at $50.14, compared to a low of $46.43 during the trading session.

The current market capitalization of the company is $13.7 billion.

The United States Securities and Exchange Commission filed a lawsuit against Coinbase on the same day, accusing the company of operating an unregistered national securities exchange, broker, and clearing agency, as well as neglecting to register the sale of its crypto asset staking-as-a-service program.

“Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC.”

Coincident with the SEC’s announcement, a task force comprised of ten state security regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin issued a Show Cause Order against Coinbase, according to SEC Chair Gary Gensler.

The order stated that “Coinbase violates the securities law by offering its staking rewards program accounts to Alabama residents without registration to offer or sell these securities.”

According to the order, Coinbase has 28 days to respond and demonstrate why it should not be ordered to cease selling unregistered securities in Alabama.

On April 14, 2021, Coinbase stock debuted on the Nasdaq exchange in the United States. Currently, shares are down 88% from their listing-day all-time high of approximately $435.

As part of its listing requirements, the exchange was required to submit Form S-1 to register with the SEC and receive approval from the regulator.