Coinbase’s stock price plunges as US token listings probed

The share price of Coinbase, one of the major crypto exchanges, has fallen by almost 21 percent following the US regulator’s decision to investigate the exchange. The Securities and Exchange Commission (SEC) will investigate to determine whether the exchange allowed its customers to trade in digital assets that should have been registered as securities.

Coinbase has increased the number of tokens available for trading, and the SEC has since increased scrutiny of the exchange. Last week Coinbase wrote to the SEC asking for information about which assets are considered securities. The exchange’s IPO came last year and since then its share price has fallen by more than 84 percent. Coinbase’s stock has weakened due to the fall in the prices of Bitcoin and Ether over the past few months. A probe by the exchange can lead to a significant fall in the share price.

Recently an exchange spokesperson said that securities are not listed on Coinbase’s platform. A Bloomberg report quoted people with knowledge of the matter as saying that the SEC’s Enforcement Unit would conduct this investigation. Last month, Coinbase reported an 18 percent reduction in its workforce due to a major drop in the crypto market. The exchange, which is headquartered in the US, had said that it has taken this step to reduce costs in this difficult period of the industry.

The decision is expected to result in layoffs of over 1,000 employees of the exchange. Brian Armstrong, chief executive officer of Coinbase, said in a blog post, “The difficult decision has been made to reduce the size of our team by approximately 18 percent. This will ensure the firm’s position during economic slowdowns.” Taking the responsibility of hiring for the exchange, he had said that a lot of people were recruited in the last few months and this is affecting the efficiency of the firm. The exchange had claimed to provide severance package and health insurance to the employees being fired.

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