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Coinbase Is Funding Against US Treasury’s Tornado Cash Sanctions

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The largest US cryptocurrency exchange, Coinbase Global Inc., assisted in organizing and is funding a lawsuit against the Treasury Department for its restrictions on coin mixer Tornado Cash.

Six people, which include two Coinbase employees, filed the lawsuit on Thursday, alleging that Treasury exceeded its authority by not stopping financial transactions that benefited foreign terrorists.

It asserts that through the use of a cryptocurrency service that provides enhanced privacy and security, the department may have unintentionally captured law-abiding Americans engaging in legitimate digital commerce.

Coinbase employees state that the sanctions affected law-abiding customers

“None of the plaintiffs is a terrorist or a criminal” in a court filing in Waco, Texas. “No one encourages terrorism or unlawful activity. Money is never hid. Each is a citizen of the United States who merely desires to carry out the entirely legal activity in private.

Attorneys for the Tornado Cash customers claimed in the complaint

The Office of Foreign Assets Control (OFAC) of the Treasury claimed on August 8 that the service Tornado, which makes it more difficult to track coins, has laundered more than $7 billion in cryptocurrencies since its inception in 2019.

The organization approved Tornado Cash’s cryptocurrency wallets as well as the related smart contract code.

According to Coinbase’s chief legal officer of the Northern District of California, Paul Grewal, OFAC’s action is probably unprecedented and could cripple the cryptocurrency sector, which is largely based on smart contracts.

In an interview, Grewal stated that “neutral technologies and tools are not within the sanctions law as has been written by Congress.” “A highway shouldn’t be shut down just because armed robbers used it. Coinbase is following the sanctions, according to the company, and we felt obliged to take action.

Requests for comment on the lawsuit were not answered by either the Treasury Department or the Justice Department.

Brian Armstrong, the CEO of Coinbase, had hinted at legal action and expressed opposition to the sanctions in his tweets and retweets.

Post-Merge Coinbase To Strictly Review Any Potential Ethereum Forks

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Coinbase has revised its material on Ethereum’s move to proof-of-stake to cover potential forks.

Coinbase said in a Thursday revision to an Aug. 16 blog post that any possible forks in the Ethereum blockchain would be evaluated “case by case.”

The crypto exchange earlier stated that it would ‘briefly stop’ Ether (ETH) and ERC-20 token deposits and withdrawals during the Merge, which is scheduled to take place between September 10 and September 20.

“Should an ETH PoW fork arise following The Merge, this asset will be reviewed with the same rigor as any other asset that is listed on our exchange,” said Coinbase.

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Post-Merge Coinbase To Strictly Review Any Potential Ethereum Forks 2

Exchanges and crypto businesses dealing in ETH have issued notifications advising clients of any necessary preparations for the Merge from proof-of-work to proof-of-stake.

Binance also stated on Thursday that it may offer support for new coins formed by a future hard fork, but that it cannot “ensure any listings” in the absence of a review mechanism.

Many people anticipate that the blockchain’s energy consumption will plummet, scalability will enhance, and the network will be less sensitive to attacks.

It’s uncertain how crypto customers will react to a forked PoW token published on Coinbase or any other crypto market. The platform created an ERC-20 token, cbETH, on Wednesday, allowing consumers to utilize staked ETH while receiving rewards.

Coinbase gearing up for the Ethereum merge

According to the Ethereum Foundation, the Merge will take place in two stages. The first phase is the Bellatrix network update, which is scheduled for September 6 at 11:34 AM.

The Paris upgrade will approach the network upgrade after completing the change from proof-of-work to proof-of-stake at the execution layer. Paris will take place on September 10 and September 20, 2022.

Because the merger would replace mining with staking, the miners will basically lose their jobs. Mining is, indeed, an energy-intensive operation that consumes a significant quantity of power and energy. PoS intends to minimize energy consumption by more than 99%.

Coinbase Would Shutdown Ethereum Staking if Trouble Comes From the Regulators

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With the long-awaited Ethereum merge rapidly approaching and the U.S. Treasury Department sanctioning coin mixer Tornado Cash this month, blockchain technologists are growing more concerned that regulations may have an impact on Ethereum’s core functionality and its post-merge proof-of-stake consensus mechanism.

In response to a fictional scenario, Brian Armstrong, CEO of Coinbase, stated on Twitter today that his company will halt its Ethereum staking service in the event of regulatory threats in order to protect the blockchain network.

Several crypto players were tagged in the fictional Ethereum situation

Lefteris Karapetsas, the creator of the open-source crypto analytics and accounting tool Rotki, presented the query on Sunday. In order to choose between two options if political authorities demanded that they censor certain addresses, Karapetsas issued a challenge to a number of key Ethereum players.

He mentioned Coinbase, Kraken, Lido, Staked, and Bitcoin Suisse in his tweets. He posed the choice: “Will you A) agree and filter at the protocol level [or] B) shut down the staking service and safeguard network integrity?”

Armstrong, responding on behalf of Coinbase, is the lone representative of one of the companies referenced in the scenario to comment.

“It’s a hypothetical we hopefully won’t actually face,” Armstrong replied. “But if we did we’d go with B I think. Got to focus on the bigger picture.”

He said that there might be a better third option or that filing a legal challenge “would help achieve a better result.”

Armstrong’s remark is especially interesting given that Coinbase regards its lucrative staking service as a “major win” for the company and is heavily reliant on it for its future.

And only last week, JPMorgan analysts stated in a note that due to Coinbase’s Ethereum staking service, the company’s shares (COIN) could profit from the Ethereum merger.

Investors and experts in Web3 are worried that, as a result of the merger, large, institutional players who offer staking services for Ethereum will be more likely to buckle under pressure from governmental regulators.

Additionally, their absence could endanger the entire network because they control a disproportionate number of validators.

Coinbase spreads its wings to Ethereum staking to US domestic institutional clients

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On Coinbase Prime is currently providing institutional domestic clients in the United States with Ethereum staking. The worldwide cryptocurrency exchange made the statement in one of its most recent blog post.

Coinbase has recently made headlines, though perhaps not for the best reasons. The former product manager of the cryptocurrency exchange was arrested only a few days ago.

Investors in COIN then received some depressing news when it was revealed that Cathie Wood of ARK Invest had sold 1.41 million shares in Coinbase. ARK was reportedly one of the largest COIN holders as of the end of June with 8.95 million shares.

The exchange finally provides some good news to its clients with its new product.

Other tokens in addition to Ethereum staking

We are all aware that Coinbase offers its consumers the ability to trade digital assets. This is accomplished by the platform’s several branches, including Coinbase, Pro, and Prime. While the standard exchange is the place to go for users looking for a clear and uncomplicated trading experience, Coinbase Pro offers a far more skilled platform for seasoned traders.

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Coinbase spreads its wings to Ethereum staking to US domestic institutional clients 4

Prime differs from the other two in that it focuses mostly on institutions. The platform offers staking services to institutions, and now it includes Ethereum in its ever-expanding array of staking options.

Institutions can experience end-to-end staking with Coinbase Prime. Customers may access the ETH asset page on their Coinbase Prime account to create a wallet, choose their stake amount, and start staking.

Institutions have access to Solana, Cosmos, Polkadot, Tezos, Celo, and other cryptocurrencies through Coinbase Prime in addition to Ethereum. Institutional clients may quickly create a wallet, choose the amount they desire to stake, and start staking Ethereum or any of the supported assets to park their funds.

According to the information in the blog article, the funds will be very secure. To maintain optimum security, the withdrawal keys are also kept in their cold storage custody vault.

Coinbase Is Reportedly Under SEC Investigation for Its Crypto Listings

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According to three persons with knowledge of the situation, Coinbase Global Inc. is under investigation by the US government to determine if it inappropriately lets Americans trade digital assets that ought to have been registered as securities.

Since a former employee and two of his accomplices were detained last week on suspicion of wire fraud, Coinbase has been the target of the regulator’s attention.

If the alleged offense includes securities, the SEC also filed a complaint charging insider trading, which falls under its scope. But according to Bloomberg, which cites unidentified sources, the SEC’s enforcement probe against Coinbase predates the agency’s inquiry that resulted in the insider trading allegations.

Coinbase hasn’t opened up about the matter

There is continuing discussion about which cryptocurrencies should be treated as securities. The SEC made a bold move by designating nine cryptocurrencies—seven of which are now listed by Coinbase—as securities as part of the insider trading investigation that was made public last week.

Coinbase was emphatic that it does not offer securities in a blog post on July 21. According to the article by Coinbase Chief Legal Officer Paul Grewal, “Coinbase has a comprehensive procedure to assess and approve each digital asset before making it available on our exchange. The SEC itself has reviewed this process.” “But the SEC rushed right into a lawsuit rather than engaging with us about the seven assets on our platform.”

The SEC uses a legal standard that was established by a 1946 US Supreme Court case to determine whether a digital asset qualifies as a security.

According to that paradigm, the agency views a token as usually falling under SEC jurisdiction when investors contribute funds to a corporation with the goal of benefitting from the leadership of the organization.

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Coinbase Is Reportedly Under SEC Investigation for Its Crypto Listings 6

Gary Gensler, the chairman of the Securities and Exchange Commission, has long argued that many cryptocurrencies are actually unregistered securities.

Gensler has encountered opposition from the sector and from the Commodity Futures Trading Commission, a rival regulator that has called for greater coordination among agencies in regulating the crypto industry.

What’s Next For SEC In Coinbase Insider Trading Scandal?

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The SEC has filed a case against a former Coinbase product manager, his brother, and one of his close associates, alleging that the trio raked $1.5 million in profits from insider trading.

In a separate complaint filed on 21st July, the apex regulator said that nine of the 25 tokens allegedly traded in the scheme were securities, sparking a huge debate online.

Ian McGinley who works as a partner at a law firm stated that the financial watchdog would now have to prove the alleged tokens are in fact securities.

“They don’t have a wire fraud statute as the DOJ does,” McGinley said, referring to wire fraud charges brought by the U.S. Department of Justice on the same date.

The charges were issued to Ishan Wahi, a former product manager at Coinbase, who engaged in wire fraud and conspiracy to commit wire fraud.

Ishan Wahi, who worked on Coinbase’s asset-listing team, had prior knowledge of the timing and public announcements of assets the exchange planned to list.

Wahi then began sharing confidential Coinbase information with his brother Nikil Wahi and associate Sameer Ramani under the garb of numerous crypto accounts and anonymous digital wallets.

The defendants were finally busted after one of them tried to flee India a day before a scheduled meeting with the exchange, according to the indictment.

SEC taking on individual actors rather than token issuers- Expert

Some in the industry feel the regulator is unlikely to move court against Coinbase, which has the means and the resources to pursue litigation against the former.

It still put Coinbase on notice that the SEC views these tokens as securities which on conviction would pressurize trading platforms to delist these tokens.

Although such a scenario would not be legally binding on the token issuers or Coinbase or other exchanges, the agency can leverage this decision against its more challenging enforcement targets.

Echoing similar sentiment, Joshua Rivera, General Counsel, Blockchain Capital expressed concern,

In an alarming strategy, the Commission directly pursues only the individual actors (as opposed to Coinbase and the token issuers) who lack the resources and the motivation to litigate the securities laws implications of the case. The SEC can expect an easy win and a federal opinion (or settlement) in fact, which the they can then leverage against its more challenging enforcement targets.

Here’s How Coinbase CEO Reacted On Uniswap’s Matching Its daily Trade Volume

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Coinbase CEO Brian Armstrong responded to a report by Clara Medalie showing that decentralized exchange Uniswap’s daily trade volume has risen up to match the levels of Coinbase.

As per the statistics provided by Kaiko’s research director, Uniswap’s daily trading volume surged by 22% since the beginning of the year and, in its values, is nearing the levels of one of the largest centralized crypto exchanges, Coinbase.

The data also showed the market share volume of decentralized protocol compared to Coinbase has increased from 27% to nearly 50%.

Armstrong tweeted that the report took only Coinbase’s centralized exchange into consideration and overlooked the fact that it also operates through different channels like wallets and DEXes.

“In other words, for the Uniswap portion of the graph, a bunch of those orders is coming through Coinbase! So the story is more complex”, the tweet read.

Acknowledging Uniswap’s tremendous growth, the chief exec reiterated that Coinbase loves DEXes and will continue integrating with them.

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Here's How Coinbase CEO Reacted On Uniswap's Matching Its daily Trade Volume 8

Experts are of the view that the major surge has been due to Ethereum’s network transaction fees hitting the lowest since 2020.

In addition to that, the strong growth can also be attributed to DEXs providing liquidity for stablecoin swaps following the Terra blowup.

In the following thread, Kaiko expert Medalie also dived into Ethereum DEX market share, and found out Uniswap pretty much dominates the space about 80-90% of total daily volume.

However, the researcher observed DEX platforms so far occupy only a small share of the volumes of large centralized exchanges.

Coinbase & Co. Continue To Rule The Roost

For instance, the total share of the daily trading volume of all DEXes on the Ethereum blockchain comprises only 8% of the total share of CEXs like Binance, FTX, and Coinbase.

Meanwhile, the top crypto exchange, with over $2 billion in daily trading volume has recently decided to “temporarily shut down” its U.S. affiliate marketing program, according to Business Insider.

The development comes at a time when many web3 firms are exploring ways to cut costs amid a price slump in crypto assets.

The exchange reportedly plans on relaunching the program sometime in 2023 but did not provide any specific dates.

Coinbase Heading Towards A Liquidity Crisis?

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Major crypto trading platform Coinbase would temporarily cease its US affiliate-marketing program on July 19, according to leaked emails shared with Insider. The report cited the gloomy current crypto market conditions as the reason for the decision.

“We regret to inform you that Coinbase will be temporarily shutting down its Affiliate Program in the United States with an effective date of Tuesday, July 19th.”

The emails added, “This has not been an easy decision, nor was it made lightly, but, due to crypto market conditions and the outlook for the remainder of 2022, Coinbase is unable to continue supporting incentivized traffic to its platform.”

While the crypto exchange has revealed to relaunch the program in 2023, it didn’t share an exact timeline, as per the report.

Coinbase Losing Its Dominance

According to Bloomberg, Coinbase has lost its top ten positions and is now ranked the 14th largest exchange.

Additionally, its average market share among the top 30 crypto exchanges is currently 2.9%, far below 5.3% in the first quarter and 3.6% in the second quarter.

Meanwhile, data from Nomics showed that the exchange’s trading volume in the past 30 days has fallen behind OKX, FTX, and ByBit.

But Coinbase’s stock has shed by more than 80% from its record peak. During the first quarter of the year, the CEX registered a loss of nearly $430 million, dealing a heavy blow to its shareholders.

In contrast to its massive revenues during the 2021 bull market, the trading firm announced that it would sack 18% of its staff in June.

Besides that, the trading platform is facing tough competition on its home turf. Binance.US, the American wing of the global cryptocurrency giant Binance, recently introduced zero-fee trading to lure more customers, in an effort to grab the key market share from Coinbase.

However, it has managed to remain the dominant exchange in the United States in spite of the advances made by rivals like Binance.US.

After a series of lay-offs, Coinbase Co-founder and CEO Brian Armstrong have outlined the firm’s internal restructuring plans that include the exchange’s in-house teams, reporting hierarchies, and working methods.

Community Favorites Shiba Inu And Apecoin Are Now Accepted by Coinbase Commerce

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Community favorites Shiba Inu (SHIB) and APE are among the seven new coins that Coinbase Commerce added to its payment options. Coinbase Commerce is a platform that allows businesses to accept bitcoin and crypto payments for products and services.

In response to consumer complaints about hefty fees, the business explained that it was determined in the most recent update to make cryptocurrency payments rapid and free if the buyer buys products and services from those merchants that are affiliated with Coinbase-Managed.

According to the firm, tokens received as payment will automatically convert into fiat so that merchants receive the precise amount they specified owing to the extreme volatility of the cryptocurrency market.

Concretizing the statement at the same time, the platform noted that auto conversion of cryptocurrency to fiat is only accessible for Coinbase-Managed businesses and operates within predetermined limits.

  • $1M: BTC, ETH, USDC, DAI
  • $500K: LTC, SHIB, USDT
  • $250K: APE, BCH, DOGE

Shiba Inu is witnessing mass adoption

Retailers of high-end accessories as well as airlines and supermarket chains are among the businesses that are embracing SHIB as a form of payment. These kinds of announcements must be commonplace by now among the Shib army, as the coin’s supporters are proudly known.

Even in the midst of the current financial downturn, Shiba Inu has seen a lot of adoption instances this year. It has repeatedly demonstrated that it is one of the most well-liked crypto ventures.

Shiba Inu is also a preferred breed among Ethereum (ETH) whales. It is the coin that the top 100 ETH whales own the most of, according to Whalestats.

On the other hand, Crypto.com tweeted that their rewards program, Crypto Earn, will no longer support 15 coins. The 15 tokens include Dogecoin (DOGE) and Shiba Inu.

Shibarium, the layer-2 protocol developed by SHIB, is also virtually ready for public release. Shibarium will be prepared for the public testnet by Q3 of this year, according to a blog post by Unification, the development team driving the program.

Coinbase To Trim More Staff If Market Worsens

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After recently cutting down its workforce, Coinbase’s senior exec has hinted that there might be further staff reduction if the large-scale sell-off in the crypto market deteriorates, Financial Times reported. Faryar Shirzad, the company’s chief policy officer told FT

“You never say never. The only commitment we can make is that we are going to operate the company responsibly and for the long haul and if that requires additional action, we will take that”.

He however added, “We don’t anticipate it at this time.”

The platform grabbed headlines ever since it decided to lay off 18% of its employees, nearly a fifth of its workforce. Brian Armstrong, the company’s CEO, wrote to employees then saying the “difficult decision” was taken to ensure stability during the market downturn.

In 2022, the firm which touts itself US largest cryptocurrency exchange has struggled to retain consumers amidst the market volatility. The platform revealed in May that it had lost $430 million in the first quarter due to a steep decline in trading fees.

The exchange’s number of transactional users too plummeted, and the firm predicted that trading volumes and users will fall again in the second quarter.

“Coinbase Is Operating In A Very, Very Tough Environment”

Shirzad said Coinbase was operating in a “very, very tough environment. “The company did what it needed to do decisively to be able to build for the long haul”, he added.

On the other hand, many of those fired employees complained that they were not notified before and only knew when their system’s access was cut off while some of them found support in the crypto community in getting job leads.

Meanwhile, Kraken has recently announced over 500 open positions for this year calling Bear markets the best for recruiting talent. Crypto giant Binance also intends to fill 2000 new hiring positions worldwide, according to the firm’s CEO Changpeng Zhao.

In a more worrisome development for the trading platform, a class-action suit was filed against Coinbase on 16th June alleging the firm misrepresented TerraUSD’s risk as an algorithmic stablecoin and that it failed to disclose its financial relationship with Terraform Labs.