Digital asset exchange Coinbase (NASDAQ: COIN) has been censored in Germany following an annual audit that raised questions about its corporate structure.
On Tuesday, BaFin, Germany’s federal financial supervisory authority, announced that it had ordered Coinbase to “ensure proper business organization” after an “audit of annual financial statements revealed organizational shortcomings at the ‘institute”.
BaFin did not elaborate on what exactly triggered the censorship, but the shoddy organizational structure has been used by digital asset firms to dodge regulators in the past. A Reuters investigation recently confirmed that Binance tried to evade regulatory scrutiny by setting up straw entities in the US, for example.
This public BaFin disguise follows a “crypto winter” that led Coinbase to report a loss of $545 million in third-quarter revenue, down more than 50% from a year earlier, and a loss revenue of $2.43 per share, adjusted.
BaFin’s decision to demand an organizational change from Coinbase is the result of a May 2022 audit by Deloitte, which found the exchange’s financial data presented accurately and fairly, but pointed to flaws in the setup. company to the German regulator.
The embattled exchange is also the subject of an SEC investigation into whether it allowed users to trade digital assets that count as unregistered securities, as well as a lawsuit filed. by Dr. Craig Wright against Coinbase passing off BTC as “fake Bitcoin” assets. not compliant with the system described in the white paper; the former could result in criminal charges and the latter a potential payout of hundreds of millions.
Coinbase is the largest digital asset exchange in the United States by trading volume. In recent years, it has expanded its operations in Europe, with Italy being the most recent country to register the exchange.
However, it’s clear that the navigation hasn’t been smooth lately; since April 2021, when it began trading on NASDAQ, Coinbase has seen its shares plummet nearly 80%, and in June it was forced to lay off 1,100 employees.
Digital assets have had a tough year across the board, and Coinbase’s latest blow at the hands of BaFin could signal more pitfalls to come as the sector comes under increasing scrutiny from global regulators to clear up some of the issues. its most opaque structures. and practices, protect investors and eliminate money laundering.
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