Coinbase Deny Option to Change Exchange Service Business Model
Date: 2023-06-09 Author: Евгений Облакевич Categories: BLOCKCHAIN
This, with reference to Coindesk, is reported by Forklog on June 8. On June 6, the SEC (US Securities Commission), following the largest crypto exchange, Binanse, filed a civil lawsuit against the exchange accusing it of illegally profiting from securities transactions. The staking service provided by the Coinbaseearm exchange also fell under the charge. As Coinbase CEO Brian Armstrong states, “We have no intention of phasing out our staking service. Again, the way these court cases play out, it's really just business,” Armstrong said during an interview with Coindesk during the Bloomberg Invest Conference.
The same Armstrong stated that staking services bring about 3% of the company's net profit.
According to the Commission statement, Coinbase combines 3 functions of a broker, exchange, and clearing agency, which are usually separated in traditional markets. The lawsuit also states that, according to the law, each of these services must be separately registered with the commission, which was not done. Such violations, according to the SEC, lead to the insecurity of the clients of the exchange, as well as the prevention of conflicts of interest.
Also, a ten-state commission led by the Alabama Securities Commission accused crypto exchange Coinbase of violating several state laws with its staking program.
The reaction of the crypto market to the SEC lawsuit was mixed. On the one hand, it was not as significant in comparison with the reaction to the lawsuit against Binanse. But at the same time, Coinbase shares sank 21% compared to the end of May.
Staking services are the cornerstone of Coinbase's strategy to diversify profits through trading. More than 90% of the company's profit was received through transaction trading in 2022, but in the last six months, the company's profit has fallen significantly due to the refusal of some investors to trade with it.
