Coinbase Stock Loses 14% as Cryptoassets’ Legal Status Questioned

Coinbase was not listed as a defendant in the lawsuit against the former product manager and his associates, which the SEC announced July 21

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • The sell-off comes shortly after the SEC classified nine tokens as securities in a complaint against a former Coinbase employee
  • Coinbase has a rigorous internal process for classifying tokens, the exchange says

Coinbase stock opened 14% lower at the start of the trading session Tuesday amid ongoing volatility in the crypto market and increasing regulatory uncertainty.

The sell-off comes days after the US Securities and Exchange Commission classified nine tokens as securities in a complaint alleging that a former Coinbase product manager and people close to him used classified information for insider trading. 

The lawsuit “could be a catalyst” for the sell-off, David Tawil, president and co-founder of Prochain Capital, said. “However, I believe that it’s a red herring. These nine tokens probably make up very little revenue for Coinbase now or in the future.” 

Coinbase has said that it does not list securities — all tokens traded on the platform are internally analyzed and reviewed to ensure this. 

“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,” Paul Grewal, chief legal officer at Coinbase, told Blockworks. 

Coinbase was not listed as a defendant in the lawsuit against the former product manager and his associates, which the SEC announced July 21. The crypto industry has largely called the classification of the nine tokens as securities “regulation by enforcement.” 

“The SEC is in for a real fight here,” Tawil said. “What about these nine coins, versus the others that were traded, deemed them ‘securities’ for the SEC?” 

Analysts surveyed by stock research firm MarketBeat still rated Coinbase a “moderate buy,” unchanged from one month ago. 

COIN was ranked 22th on Fidelity’s list of top buys and sells Tuesday, with 559 buy orders and 308 sells as of 10:18 am ET.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

RTK networks are critical to enabling a world of ubiquitous autonomous drones, vehicles, and industrial robots. We believe the GEOD token enables both a cost and product advantage for the GEODNET RTK network, which will allow it to out-compete multi-billion dollar incumbents Trimble and Hexagon.

article-image

HashKey’s Jupiter Zheng highlighted three success areas he’s watching: Ethereum, Solana and certain tokens in DeFi

article-image

Jack explored the various AI and memecoin projects that have sprung up over the past month

article-image

If gold remains steady today, a single move from bitcoin to $98,500 would do it

article-image

Revenue estimates for the third quarter come in at $33 billion, which would be an 83% increase from the prior year

article-image

Senator Cynthia Lummis hopes a US strategic bitcoin reserve can be teed up for “adoption in 2025”

article-image

As EIP-4844 “blobs” transform the economics of Ethereum layer-2s, a growing debate pits long-term scalability against immediate ETH value