Altcoin prices plunged on Tuesday as a reported US Securities and Exchange Commission (SEC) investigation of the Coinbase cryptocurrency exchange roiled the market.
Accordingly, bitcoin’s decline continued as the world’s largest digital asset sank about 4%, falling below $21,000 around the time that conventional markets closed in North America. (All crypto prices based on CoinMarketCap data.)
Uniswap, convex down 14%
WAVES was down 20% shortly before traditional markets shut down, but the coin then quickly rallied. It was still down about 5%.
UNI to USD
SEC scrutiny increases
The SEC is probing whether Coinbase let Americans trade assets that should have been registered as securities, Bloomberg reported while citing three unidentified sources familiar with the investigation.
Two of the sources told Bloomberg that the SEC has increased its scrutiny of Coinbase since the exchange has offered more tokens up for trading.
“We are confident that our rigorous diligence process – a process the SEC has already reviewed – keeps securities off our platform, and we look forward to engaging with the SEC on the matter,” Coinbase chief legal officer Paul Grewal said on Twitter.
The SEC has declined to comment.
Coinbase stock sinks
On Tuesday, Coinbase’s stock (COIN) closed down 21.08% on the NASDAQ Global Select Market. Coinbase disclosed in its first-quarter earnings report that the SEC has investigated some of its customer programs, operations and intended future products, including the company’s stablecoin and yield-farming initiatives.
According to Bloomberg, the SEC probe predates an investigation into an alleged insider trading scheme that prompted the regulator to sue a former Coinbase manager and two other people. SEC chief Gary Gensler has taken a tough stance on cryptocurrency as President Joe Biden’s administration decides how to regulate the sector.
Gensler has demonstrated a clear desire to regulate digital assets as securities. Thus far, SEC concerns have related to how crypto developers raised funds prior to holding initial coin offerings (ICOs).
Gensler views coins as securities
In July 2021, Gensler told the Aspen Security Forum that he believes all digital tokens and ICOs violate US securities laws. Gensler’s stance is similar to that of his predecessor Jay Clayton.
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Gensler contends that cryptocurrencies may allow markets to be manipulated and cause investors to suffer huge losses.
The crypto industry is closely monitoring the SEC’s lawsuit against Ripple, the company behind the XRP coin. The SEC contends that Ripple sold unregistered securities while raising money for its ICO.
But the company has put up a staunch fight.
Second day of declines
Tuesday marked the crypto sector’s second day of widespread declines after it had rallied last week. On Friday, bitcoin challenged the $24,000 barrier.
Prior to last week, analysts and other bitcoin watchers had wondered whether it would stay below $18,000.
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