The largest cryptocurrency exchange in the United States is currently on fire after crypto advocate Catherine Wood’s investment firm sold over 1.4 million shares of Coinbase earlier this week.
With great enthusiasm, the business floated on Nasdaq in April of last year, with shares debuting at $381 each. However, as of the time, this story was being written, Coinbase’s share price was just $62, a sharp decline of 83 percent from the company’s launch price in 2017.
So, precisely how did the business arrive here? We clarify.
In a memo published in June, Coinbase’s co-founder and CEO Brian Armstrong said that the business was firing 1,100 workers, or around 18 percent of its staff, as a result of the challenging economic climate.
Armstrong acknowledged in the memo that the firm “expanded too rapidly” and “overhired” during the 2021 cryptocurrency market bull run.
The U.S. Department of Justice accused Ishan Wahi, his brother Nikhil Wahi, and friend Sameer Ramani of wire fraud in connection with a plot to engage in insider trading in cryptocurrency assets on July 21 in the first-ever cryptocurrency insider trading case. The other two reportedly received information from Ishan Wahi about cryptocurrency assets that were about to be placed on Coinbase, and the three are accused of making around $1.5 million through unauthorized trades. On July 21, the brothers were taken into custody in Seattle.
On his official Twitter account, Coinbase’s chief security officer Phillip Martin said that the company had fired the employee and was working with the Department of Justice.
According to Bloomberg, the US Securities and Exchange Commission (SEC) was conducting a separate investigation into Coinbase to see if it had inappropriately let Americans trade digital assets that ought to have been registered as securities.
Since the exchange platform boosted the number of tokens in which it provides trade, the SEC has been paying closer attention to Coinbase. According to the article, the SEC investigation began before the agency’s inquiry into the suspected insider trading scheme stated previously.
According to another Bloomberg story, the SEC claims that Nikhil Wahi and Ramani bought “at least 25 crypto assets, at least nine of which were securities.”
In a blog post on July 22, Coinbase’s chief legal officer, Paul Grewal, stated: “Coinbase does not list securities on its platform. Period.”
None of the nine assets named in the SEC’s charges—even though seven of them are available on Coinbase’s platform—were securities, he said.
In a statement on July 21, Coinbase requested that the SEC outline the regulatory framework for digital assets in detail.
When Coinbase’s share price fell to $53 on July 26, crypto advocate Catherine Wood’s investment company ARK Investment Management sold 1.4 million shares of the company. By holding 9 million shares at the end of June, ARK Invest was the third-largest stakeholder in Coinbase, according to a Bloomberg article.
These are the occurrences that led to Coinbase’s present situation. As investors withdraw in anticipation of inflation and a recession, the most recent Fed rate rise, which was announced on July 27, is anticipated to have an effect on the cryptocurrency market. How Coinbase will fare in the impending storm will only become clear with time.
