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Crypto market wrap: SEC scrutiny of Coinbase spells price plunge

By Monte Stewart


Updated

Man in front of computer screen
Altcoin prices and bitcoin prices sna

Altcoin prices plunged on Tuesday as a reported US Securities and Exchange Commission (SEC) investigation of the Coinbase cryptocurrency exchange roiled the market.

Accordingly, bitcoin’s decline continued as the world’s largest digital asset sank about 4%, falling below $21,000 around the time that conventional markets closed in North America. (All crypto prices based on CoinMarketCap data.)

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WAVES to USD

Uniswap, convex down 14%

WAVES was down 20% shortly before traditional markets shut down, but the coin then quickly rallied. It was still down about 5%.

Uniswap (UNI) and convex (CVX) both dropped 14%, while polygon (MATIC), apecoin (APE), stepn (GMT), and synthetix (SNX) all fell 10%. 

UNI to USD

SEC scrutiny increases

The SEC is probing whether Coinbase let Americans trade assets that should have been registered as securities, Bloomberg reported while citing three unidentified sources familiar with the investigation.

Two of the sources told Bloomberg that the SEC has increased its scrutiny of Coinbase since the exchange has offered more tokens up for trading.

“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 chief legal officer Paul Grewal said on Twitter.

The SEC has declined to comment.

Coinbase stock sinks

On Tuesday, Coinbase’s stock (COIN) closed down 21.08% on the NASDAQ Global Select Market. Coinbase disclosed in its first-quarter earnings report that the SEC has investigated some of its customer programs, operations and intended future products, including the company’s stablecoin and yield-farming initiatives.

According to Bloomberg, the SEC probe predates an investigation into an alleged insider trading scheme that prompted the regulator to sue a former Coinbase manager and two other people. SEC chief Gary Gensler has taken a tough stance on cryptocurrency as President Joe Biden’s administration decides how to regulate the sector.

DOGE/USD

0.16 Price
+7.430% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

ETH/USD

3,654.56 Price
+17.930% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

BTC/USD

69,800.75 Price
+5.220% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.54 Price
+4.920% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

Gensler has demonstrated a clear desire to regulate digital assets as securities. Thus far, SEC concerns have related to how crypto developers raised funds prior to holding initial coin offerings (ICOs).

COIN to USD

Gensler views coins as securities

In July 2021, Gensler told the Aspen Security Forum that he believes all digital tokens and ICOs violate US securities laws. Gensler’s stance is similar to that of his predecessor Jay Clayton.

Gensler contends that cryptocurrencies may allow markets to be manipulated and cause investors to suffer huge losses.

The crypto industry is closely monitoring the SEC’s lawsuit against Ripple, the company behind the XRP coin. The SEC contends that Ripple sold unregistered securities while raising money for its ICO.

But the company has put up a staunch fight.

 

Second day of declines

Tuesday marked the crypto sector’s second day of widespread declines after it had rallied last week. On Friday, bitcoin challenged the $24,000 barrier.

Prior to last week, analysts and other bitcoin watchers had wondered whether it would stay below $18,000.

Markets in this article

WAVES/USD
WAVES/USD
2.6472 USD
0.1569 +6.430%
APE/USD
APE/USD
1.3217 USD
0.1035 +8.700%
CVX/USD
CVX/USD
2.6662 USD
0.2274 +9.770%
GMT/USD
GMT/USD
0.23580 USD
0.01857 +8.770%
MATIC/USD
MATIC/USD
0.76770 USD
0.05875 +8.570%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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