By Paul Grewal, Chief Legal Officer
Tl;dr: Coinbase does not list securities on its platform. Period.
We have said it before, but given today’s events, it bears repeating.
Earlier today, following a Department of Justice (DOJ) investigation into a former Coinbase employee’s misuse of confidential Coinbase information related to listing decisions, the Securities and Exchange Commission (SEC) separately filed securities fraud charges against this individual related to this wrongdoing. The SEC alleges that nine digital assets involved are securities. The DOJ reviewed the same facts and chose not to file securities fraud charges against those involved. As CFTC Commissioner Caroline Pham stated, this is “a striking example of ‘regulation by enforcement’” by the SEC.
We agree with Commissioner Pham and, respectfully, 100% disagree with the SEC’s decision to file these securities fraud charges and the substance of the charges themselves. Let me explain why.
Seven of the nine assets included in the SEC’s charges are listed on Coinbase’s platform. None of these assets are securities. Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange — a process that the SEC itself has reviewed. This process includes an analysis of whether the asset could be considered to be a security, and also considers regulatory compliance and information security aspects of the asset. To be explicit, the majority of assets that we review are not ultimately listed on Coinbase.
We cooperated with the SEC’s investigation into the…