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SEC's Coinbase case targets unit employing many bankers

The SEC is on a roll. Yesterday, it published a 136 page complaint against Binance and its founder, Changpeng Zhao. Today, it's published a 101 page complaint against Coinbase. The Coinbase complaint names no names, but it does repeatedly mention a unit of the crypto exchange that's been particularly accommodating of former bankers: prime broking. 

Coinbase has been busy marketing prime broking as a “prime broker for digital assets,” says the SEC. Among other things, it claims to be, a "full-service prime brokerage platform with everything that institutions need to execute trades and custody assets at scale.”

As such, the SEC says Coinbase has been running an unregistered brokerage service. It's not just Coinbase prime, but prime is a big part of it. Coinbase has yet to publish a response to the SEC's complaint on its blog, but in the meantime its share price is down 15%. On that basis alone, the new complaint doesn't seem the best news for everyone in its prime business, many of whom once worked in banking.

Coinbase's prime people encompass: Brett Tejpaul, a former JPMorgan and Barclays head of fixed income and structured product sales respectively, who heads Coinbase's whole institutional business, prime included; Matt Boyd, who runs prime finance and was once global head of securities finance at BlackRock; Ayan Dirie, head of APAC and EMEA institutional account management, who joined from Goldman Sachs, and more junior people like Drew Luehe, a former member of Morgan Stanley's prime broking team.  None of these people are mentioned or directly implicated in the SEC's complaint, but it's not a good look for their business area. 

Coinbase's institutional business as a whole employs as many as 300 people, many of whom had a banking background. Some have already been burned in previous rounds of layoffs. 

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Photo by Ricardo Arce on Unsplash


AUTHORSarah Butcher Global Editor

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