Tag Archives: SEC

Coinbase Warned By SEC Of Potential Securities Charges

Legal, , ,

The Securities and Exchange Commission issued crypto exchange Coinbase a Wells notice, warning the company that it identified potential violations of U.S. securities law, CNBC reported.

According to CNBC, Coinbase shares fell nearly 12% in extended trading after the news broke on Wednesday, adding to an 8.16% drop during regular trading hours.

“Based on discussions with the Staff, the Company believes these potential enforcement actions would relate to aspects of the Company’s spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet,” Coinbase said in a regulatory filing. “The potential civil action may seek injunctive relief, disgorgement, and civil penalties.”

CNBC also reported that the SEC has ramped up its enforcement of the crypto industry, bearing down on companies and projects that the regulator alleges were hawking unregistered securities. Reports first surfaced of an SEC probe into Coinbase in mid-2022.

Coinbase posted some information on its website. Here is from the TL:DR (too long, didn’t read) section:

“Today, the SEC gave Coinbase a “Wells notice” regarding an undefined portion of our listed digital assets, our staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet after a cursory investigation. We are prepared for this disappointing development. We are confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets. Rest assured, Coinbase products and services continue to operate as usual – today’s news does not require any changes to our current products or services.”

The Wall Street Journal reported that the Securities and Exchange Commission has told Coinbase Global Inc. that it plans to take enforcement action against the company, escalating its crackdown on digital-currency firms by targeting the biggest U.S. crypto exchange, Coinbase said Wednesday.

According to the Wall Street Journal, Coinbase said it received a letter from the SEC known as a Wells notice, in which regulators say they believe companies or individuals violated investor-protection laws. The notices aren’t final because the agency’s commissioners must authorize any lawsuits or enforcement settlements.

By warning Coinbase about a potential lawsuit, The Wall Street Journal reported, the SEC is setting its sights on one of the biggest names in crypto, a publicly traded company that has helped bring tens of millions of customers into the digital-currency markets since it was founded 2012.

A lawsuit would represent SEC Chair Gary Gensler’s biggest step to assert his agency’s jurisdiction over crypto. If Coinbase prevailed in a lawsuit, it would embolden the crypto industry’s claims that Mr. Gensler has overreached and that virtual currencies shouldn’t be subject to U.S. securities laws.

TechCrunch reported that in response to receiving a Wells notice from the FTC, Coinbase’s CEO Brian Armstrong struck a confident posture, tweeting that his company is “right on the law, confident in the facts, and welcome the opportunity for Coinbase (and by extension the broader crypto community) to get before a court.”

In a separate tweet, Armstrong wrote: “Two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase runs a rigorous asset review process and has rejected more than 90% of assets that have applied to be listed on the platform.”

It is unclear to me exactly how this particular situation will end up. I suppose there will eventually be an announcement if something changes.

Activision Blizzard Pays SEC $35 Million To Settle Probe

Gaming,

CNBC reported that video game developer Activision Blizzard agreed to pay a $35 million settlement over charges it failed to maintain “adequate” controls for collecting and assessing reports of workplace misconduct and that it violated federal whistleblower protection rules, the Securities and Exchange Commission said Friday.

The SEC claimed workplace misconduct complaints were neither collected nor analyzed as expected by public disclosure regulations, CNBC reported. “Moreover, taking action to impede former employees from communicating directly with the Commission staff about a possible security law violation is not only bad corporate governance, it is illegal,” SEC director Jason Burt said.

The settlement is not an admission of wrongdoing but concludes a probe that focused on Activision Blizzard’s standards from 2018 to 2021.

The SEC included the following paragraph in its press release:

“The SEC’s order finds that Activision Blizzard failed to implement necessary controls to collect and review employee complaints about workplace misconduct, which left it without the means to determine whether larger issues existed that needed to be disclosed to investors,” said Jason Burt, Director of the SEC’s Denver Regional Office. “Moreover, taking action to impede former employees from communicating directly with the Commission staff about a possible securities law violation is not only bad corporate governance, it is illegal.”

The Wall Street Journal reported that female employees at Activision complained for years about alleged sexual assaults and mistreatment. The SEC’s probe examined what Activision’s management knew about the alleged incidents and how it addressed them internally, the Journal reported.

Activision’s system wasn’t designed to collect and analyze complaints about workplace misconduct across its separate business units, the SEC said in a settlement order. As a result, Activision’s management and directors often didn’t have information about employee complaints or incidents involving harassment, the SEC order said.

According to the Wall Street Journal, the settlement also said that Activision’s separation agreements with employees from 2016 to 2021 included an improper clause requiring ex-workers to tell the company if agencies such as the SEC contacted them about reports of misconduct. The SEC said that requirement violated the SEC’s whistleblower-protection rules, which seek to ensure that company insiders aren’t prevented from informing regulators about wrongdoing.

It is interesting to note that The Wall Street Journal reported that the $35 million fine is a significant penalty for an enforcement case focused on a company’s disclosure procedures. The SEC under Chair Gary Gentler and Enforcement Director Gurbir S. Grewal has ratcheted up penalties, saying fines need to be higher to effectively deter wrongdoing.

My hope is that the SEC’s order will result in Activision Blizzard to actually listening to employees who have been harassed or abused in the workplace and enact a significant penalty upon the person(s) who engaged in harassment or abuse. If not, I suppose the SEC can take additional action on the company.

U.S. SEC To Set Up Offices For Crypto Filings

Information,

The U.S. securities regulator will set up two new offices to deal with filings related to crypto assets and the life sciences sector, Reuters reported. According to Reuters, the “Office of Crypto Assets” and the “Office of Industrial Applications and Services” will join seven other existing offices under the Securities and Exchange Commission (SEC) department, which handles corporate disclosure findings.

The Securities And Exchange Commission (SEC) posted a press release titled: “SEC Division of Corporation Finance to Add Industry Offices Focused on Crypto Assets and Industrial Applications and Services”. From the press release (posted September 9, 2022):

The Securities and Exchange Commission today announced plans to add an Office of Crypto Assets and an Office of Industrial Applications and Services to the Division of Corporation Finance’s Disclosures Review Program (DRP). The DRP has long had offices to review company filings by issuers. The two new offices will join the seven existing offices that provide focused review of issuer filings and that are grouped by industry experts to further the Division’s work to promote capital formation and protect investors. The DRP anticipates the new offices to be established later this fall…

According to the press release, The Office of Crypto Assets will continue the work currently performed across the DRP to review filings involving crypto assets. Assessing companies and filings to one office will enable the DRP to better focus its resources and expertise to address the unique and evolving filing review issues related to crypto assets.

The Office of Industrial Applications and Services will be responsible for the non-pharma, non-biotech, and non-medical products companies currently assigned to the Office of Life Sciences. In recent years, the life sciences industry has experienced significant growth, which has added to the number of filings and companies assigned to that office. Transitioning a subset of these companies to a separate group will allow the DRP staff to build better specialized expertise.

Reuters reported that cryptocurrencies and other digital assets have soared in popularity over recent years and are getting increasingly intertwined with the regulated financial system, saddling policymakers with monitoring risks in a largely unregulated field. Allegations of money laundering against some crypto firms as well as consumer data violations in the United States, the biggest market for digital assets, have also affected demand.

In March of 2022, President Joe Biden signed an executive order calling on the government to examine the risks and benefits of cryptocurrencies, CNBC reported. According to CNBC, that order was signed by President Biden. The order called on federal agencies to take a unified approach to regulation and oversight of digital assets (according to a White House fact sheet).

Personally, I am not surprised that the U.S. federal government wants to put in place specific offices that can review filings of crypto assets. Cryptocurrency, after all, is a form of currency. As such, it appears to fall under rules similar to that of other types of currency or assets.

SEC College Sports Come to Boxee

Boxee, Set Top Box, video, , , ,

Yesterday Boxee announced that SEC Digital Network has launched their college sports app for the Boxee platform.  For those who don’t, SEC is the Southeaster Conference.  They cover all areas of college sports for the member schools.    You can visit their website for more information.  The app features news, specials, highlight, full games, and a lot more.

The feature set, as announced by Boxee, will include:

SEC Today
News and highlights, these daily updates keep you up to date on any major developments from around the conference. SEC Today also offers team previews for all of SEC football.

Specials
Watch classic documentaries focused on SEC Sports, profiles of great SEC players who’ve gone pro, or interviews of current SEC coaches.

Full Games
Rewatch some of the greatest SEC games of the past 20 years. Plus watch many of the best football games from last season. All of the games are totally free to watch, so stop worrying about wearing out those VHS tapes of last season’s football games and stream some of the best games whenever you want.

My Library
Shop the SEC OnDemand streaming VOD store for a library of over 700+ full-length historic and current SEC games. This season’s games are available as soon as midnight the following Saturday. All videos you buy there are automatically accessible on Boxee through the SEC Digital Network app’s My Library section.

According to claims, the app wil include exclusive content that won’t be available anywhere else.  If you own the Boxee Box, or use their software on a PC or Mac, and are a college sports fan, then this will be the best $0 you ever spent.  To find out more about Boxee, you can visit Boxee.tv.