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Coinbase SEC investigation: Coinbase is deep into “shitcoins”

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is coinbase regulated by the SEC

The question of whether Coinbase is regulated by the SEC is off the table today. Especially in view of how much news is related to the proceedings between the exchange and the regulator. Cryptocurrency exchange Coinbase is in the spotlight because of allegations of insider trading, but they aren’t the only ones under scrutiny. The SEC is also facing a backlash for failing to regulate the digital asset sector and prevent such misconduct. Against this backdrop, the conflict between Coinbase and the SEC has become the center of attention. 

Coinbase SEC investigation

Coinbase SEC disclosure is constantly in the news. Coinbase is currently experiencing regulatory difficulties. The Coinbase SEC annual report released this week says that the SEC is investigating the company for selling digital assets that should have been registered as securities. This circumstance has caused its stock price to plummet. Katie Wood has abandoned her position in the company’s stock. 

This news hurts Coinbase because the company has remained on the side of regulators since its founding. Bloomberg’s Max Chafkin lays the blame on Coinbase’s rash decision several years ago to “turn to shitcoins. A familiar term in the crypto world, shitcoins usually refer to digital tokens that have no apparent utility beyond speculative advertising.

Coinbase spent years building its reputation, but then squandered it all on “shitcoins.” This led to Coinbase SEC class actions. This included promoting new Dogecoin coins to small and unsophisticated investors, many of whom suffered losses of 80% or more. As a result, the SEC cracked down on Coinbase. Meanwhile, the decision to add shitcoins also opened the door to a fraudulent insider trading scheme by a Coinbase manager.

SEC Liability

It’s easy to blame Coinbase executives for this situation, but the main blame lies with the SEC. The situation has gotten much worse under current SEC Chairman Gary Gensler. Gensler is a non-lawyer and has used his position to boost his credibility with the Democratic Party.

In doing so, Gensler has sought to hit major companies such as Coinbase, which has largely followed the rules, allowing the worst players to get out of control. Two of the biggest cryptocurrency crashes this year-the collapse of Terra, a Ponzi scheme-like project, and the bankruptcy of lender Celsius-occurred in front of Gensler, and the SEC could not intervene in time. As a result, small investors are losing billions of dollars.

Coinbase sued by SEC – what came of it?

How did the SEC investigation into Coinbase, which like all such investigations is supposed to be secret before charges are filed, even end up in the media? Some experts on Twitter have suggested that Gensler leaked the investigation to Bloomberg to punish Coinbase, which has publicly complained about the SEC’s behavior. An experienced crypto lawyer familiar with the customs of Washington, D.C., says this is almost certainly true, and adds that there are traces of Gensler in earlier leaks to the Wall Street Journal.

The SEC has also been criticized for the amateurism of high-ranking officials who leave the agency to cash in on private law firms. The most egregious example is laid out in a new revelation that shows how a lack of oversight allowed former SEC lawyers to use their connections at the agency to play up the whistleblower program and make themselves tens of millions of dollars.

Gensler may want to get his house in order before torturing the likes of Coinbase. Specifically, he should stop political machinations and create a structure to help crypto and blockchain, one of the most important technologies of this century, flourish on America’s shores.

It’s unlikely he’ll do that, but it may not matter. The debate about how to regulate cryptocurrency is moving beyond the SEC to other agencies, including the CFTC, which has recognized the importance of innovation as well as protecting consumers from harm. 

The bottom line is that shitcoins got Coinbase in trouble with the SEC, but looking at the aftermath of the shitcoins boom, it is the SEC that has the most to explain its inaction.

Cryptocurrency

Ripple (XRP) Price Outlook: Can Bulls Defend $0.6 or is a Crash Coming?

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The XRP rally appears to be taking a pause. Will bears return?

Key Support levels: $0.54

Key Resistance levels: $0.68

1. Rally on Hold

In the past few days, XRP failed to make a higher high which could give an opportunity for sellers to return. At the time of this post, buyers still managed to hold the price around 60 cents. If they lose this key level, then a deeper pull back could follow.

XRPUSDT_2024-07-25_13-02-48
Chart by TradingView

2. Volume Continues to Fall

The volume continued to fall compared to our last update. This is an early bearish indicator. If nothing changes, then sellers are likely to push XRP closer to the most important support which is found at 54 cents.

XRPUSDT_2024-07-25_13-03-28
Chart by TradingView

3. Weekly MACD Remains Bullish

While the intra-day volatility continues to be high, the weekly timeframe gives a clear bullish bias. Even if XRP falls to the key support again, buyers are likely to return there.

XRPUSDT_2024-07-25_13-03-02
Chart by TradingView
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Cryptocurrency charts by TradingView.

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ETH Price Dumped 10% as Spot Ethereum ETFs Saw $133M in Outflows on Day 2

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The second day of trading for the spot Ethereum ETFs was quite different than the first as more than $133 million were withdrawn from the largest financial vehicles.

The underlying asset’s price reacted with a massive price drop that drove it south by 10% in a day, thus proving the initial reports that the approvals might turn out to be a sell-the-news moment.

CryptoPotato reported yesterday that the spot Ethereum ETFs had a solid first day of trading (on July 23) when more than $106 million poured in as a whole. BlackRock’s ETHA and Bitwise’s ETHW led the pack with $266.5 million and $204 million, respectively.

They even managed to reduce the impact of the outflows from Grayscale’s ETHE, as $484 million exited the converted fund.

However, the landscape on July 24 was entirely different. Grayscale’s product had $326.9 million in outflows, but the demand for the other ETFs was missing, and the overall withdrawals for the day soared to $133.3 million. Only Fidelity’s FETH had an impressive day with $74.5 million in inflows.

Somewhat expected, ETH’s price suffered due to this underwhelming performance by the products that were just launched. The asset tumbled from almost $3,500 to a multi-day low of $3,130 earlier today, marking a 10% decline.

Ethereum/Price/Chart 25.07.2024. Source: TradingView
Ethereum/Price/Chart 25.07.2024. Source: TradingView

Despite recovering some ground since then, ETH is still 8% down on the day and sits below $3,200. Over $100 million in long ETH positions have been wrecked in the past day, which is a third of the entire amount ($292 million as of now).

Recall that there were several reports ahead of the spot Ethereum ETF launch that suggested the upcoming products will become a sell-the-news moment at first.

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Ripple (XRP) Community Speculates on Upcoming SEC Meeting Today

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TL;DR

  • The Ripple vs. SEC legal battle is still ongoing, with some experts predicting a resolution by the end of summer. An SEC meeting today has fueled speculation about an imminent agreement.
  • Ripple’s token XRP has been rallying and could experience significant volatility based on the lawsuit’s outcome. A favorable ruling might trigger a bull run, while the opposite decision could hinder its progress.

Could Today be the Big Day?

The legal battle between Ripple and the United States Securities and Exchange Commission (SEC) has witnessed numerous developments lately. It entered its trial phase in April 2024 (more than three years after the start of the process), with both parties presenting necessary information and documents and abiding by the court rules.

Despite being in its final stage, a resolution is still yet to come. Ripple’s CEO recently argued that the entities might shake hands “very soon,” while other experts were more precise with their predictions. The American attorney Fred Rispoli suggested that the case could be officially closed by July 31, whereas Jeremy Hogan thinks this could happen before the summer’s end.

Some X users speculated that an agreement may be announced as soon as this week based on the SEC’s closed meeting scheduled for today (July 25). The agency is supposed to discuss several subjects, including “Institution and settlement of administrative proceedings” and “Resolution of litigation claims.” The meeting was initially set for July 18 but later rescheduled for today.

On the other hand, other industry participants reminded that the Commission often conducts similar gatherings, and so far, it has not touched upon the Ripple case. 

The Possible Impact on XRP

Ripple’s native token has been rallying recently, briefly surging to $0.63 last week and currently hovering at around $0.61. It is among the few altcoins that have defied the market-wide correction. Bitcoin (BTC), for instance, is down 2.5% in the past 24 hours, while Ethereum (ETH) has tumbled by nearly 10% in the same period. 

A potential resolution of the Ripple v SEC lawsuit could trigger enhanced volatility for XRP as the asset could repeat its surge from last year in case of a positive outcome for the company or vice-versa.

Some believe Ripple has the upper hand in the spat, having secured three vital (yet partial) court victories throughout 2023. XRP’s price skyrocketed by over 70% mere hours after the first triumph in July last year. Back then, Judge Torres ruled that Ripple’s programmatic sales to secondary trading platforms do not constitute offers of investment contracts.

Those willing to learn more about the case and its possible impact on XRP, please take a look at our dedicated video below:

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