- Coinbase is under investigation by the Securities and Exchange Commission, Bloomberg reported.
- The SEC is looking into whether the largest crypto trading platform in the US offered unregistered securities to users.
- Coinbase's legal chief says the platform is confident in its "rigorous diligence process".
Coinbase, the largest cryptocurrency trading platform in the US, is under federal investigation into whether it improperly allowed US investors to trade digital assets that should have been registered as securities, Bloomberg reported.
Shares of the company dropped as much as 16% to $56.27. The stock's value so far this year has declined by more than 75%.
Scrutiny of Coinbase by the Securities and Exchange Commission has increased since the company expanded the number of tokens available to trade, two sources told Bloomberg in a report first published late Monday. The sources asked not to be named because the investigation hadn't been disclosed publicly.
"[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," Coinbase's Chief Legal Officer Paul Grewal said on Twitter late Monday.
The report said Coinbase allows Americans to trade more than 150 tokens and if those products were deemed securities, the company could need to register as an exchange with the SEC. The investigation predates the SEC's probe into an alleged insider trading scheme that led the agency last week to sue a former Coinbase manager and two other people.
Last week, Coinbase in a letter to the SEC called on the agency to provide clearer rules on which assets it considers as securities.