A New York-based bitcoin exchange has shut down following an investigation by the US Securities and Exchange Commission.
In a statement, Coinbase said it would suspend operations indefinitely due to “significant compliance issues and risks associated with the Company’s compliance with federal laws and regulations.”
The company said the suspension was in response to a SEC investigation of Coinbase and the US Department of Justice’s Office of the Inspector General, which launched in July.
It added that the SEC’s investigation found Coinbase “was not complying with certain applicable federal laws” and “in violation of the Investment Advisers Act of 1940, the Investment Company Act, the Foreign Corrupt Practices Act, and other applicable securities laws.”
A spokesperson for the Department of the Treasury did not immediately respond to a request for comment.
The US regulator, the Office of Foreign Assets Control (OFAC), said Coinbase violated sanctions and other laws when it was selling and transferring money from people to companies that it had facilitated.
In addition, it said the exchange was “conducting business as an investment adviser in violation of certain rules and regulations,” including the Foreign Account Tax Compliance Act (FATCA), the Foreign Investment Promotion and Disarmament Act (PEPADA), and the Foreign Agents Registration Act (FAIRDA).
The DOJ also said the company failed to file reports of its financial activities and failed to report certain information to the authorities.
The firm said the “investment advisor” designation is reserved for firms that “offer or assist in offering investment advice or funds transfers, and facilitate the transfer of funds to or through the investment advisor.”
The firm’s decision to halt operations was made because of a “potential threat to the public,” the statement said.
