The US Securities and Exchange Commission (SEC) is investigating Coinbase over its alleged sale of certain securities. According to the SEC, this sale is illegal since it concerns digital tokens that are not registered. The allegation has caused a 21% dip in the company’s shares, the worst since it was founded.
This issue comes after the involvement of a former staff of Coinbase in an illegal digital token trading scheme. In that case (which is ongoing), the parties involved bought unregistered tokens and sold them once they became official. This made their initial investment skyrocket, prompting them to sell the tokens and making a huge profit. This standing issue is the backbone of the SEC’s investigations into the cryptocurrency platform’s unregistered tokens.
So, what is wrong with selling a digital token? Well, a digital token is not a cryptocurrency, it is simply a digital representation of security that exists on a Blockchain. But when it comes to selling a token it has to be first registered, and according to the SEC, the tokens in the case relating to Coinbase are not registered.
Coinbase has taken its stand against the SEC, saying that it does not sell unregistered tokens on its platform. The company has also asked for clear rules regarding the listing and sale of digital tokens. Although Coinbase is not in trouble with the SEC at the moment, investigations on digital tokens sold by its former staff on its platform are in motion.
