Shares of Coinbase (COIN) are trading lower after a judge ruled that the Securities and Exchange Commission (SEC) can proceed with its lawsuit against the cryptocurrency exchange. The SEC alleges that Coinbase violates federal securities laws and claims that the Coinbase wallet operates as an unregistered brokerage.
Yahoo Finance's Jennifer Schonberger breaks down the details.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
[MUSIC PLAYING]
SEANA SMITH: We are watching shares of Coinbase off just about 1.5% after a judge ruled to allow the SEC's lawsuit against the crypto exchange to go forward. Now the judge saying Coinbase engages in the, quote, unregistered sale and offer of securities under U.S. law. Joining us now is our very own Jennifer Schonberger for the latest on this. Jennifer.
JENNIFER SCHONBERGER: Hi, Seana. That's right. A judge in the Southern District of New York ruling this morning that Coinbase engaged in unregistered sales of securities, allowing the SEC's lawsuit to continue moving forward. The judge ruled that Coinbase operates as an exchange, a broker, and a clearing agency for the purposes of federal securities laws. Recall, the SEC sued Coinbase last year, saying that it violated federal securities laws based on the fact that it was trading, engaging in securities. It also argued that Coinbase wallet acted as an unregistered brokerage.
We are hearing from Coinbase's Chief Legal Officer Paul Grewal, who is tweeting right now, saying that, quote, "Today, the court decided that our SEC case will move forward on most of the claims but dismissed the claims against Coinbase wallet. We were prepared for this, and we look forward to uncovering more about the SEC's internal views and discussions on crypto regulation. Looking ahead, we remain confident in our legal arguments."
Shares of Coinbase, of course, are dropping on this news. We will continue looking into this and what the ramifications mean for the U.S.'s largest crypto exchange going forward.
