SEC – Resilient LLP (formerly DeMarco Allan LLP)

The U.S. Securities and Exchange Commission (SEC) today charged Coinbase, Inc., the largest crypto asset trading platform in the U.S., with operating a crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency as well was failing to register the offer and sale of its crypto asset staking-as-a-service program (the Complaint). Regulators across the world are increasing their oversight of new and emerging securities and crypto carbon offerings should heed the recent actions of the SEC and carefully examine whether their offerings constitute unregulated securities. This bulletin briefly summarizes key details of the Complaint. The SEC’s Complaint alleges that Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the SEC as required by law. The Complaint alleges that since 2019, Coinbase has: provided a marketplace and brought together the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interact; engaged in the business of effecting securities transactions for the accounts of Coinbase customers; provided facilities for comparison of data respecting the terms of settlement of crypto asset securities transactions, served as an intermediary in settling transactions in crypto asset securities by Coinbase customers, and acted as a securities depository; and engaged in an unregistered securities offering through its staking-as-a-service program, allowing customers to earn profits from the “proof of stake” mechanisms of certain blockchains and Coinbase’s efforts. The SEC stated that Coinbase’s actions “deprive[d] investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC” and that its failure to register its staking-as-service program “depriv[ed] investors of critical disclosure and other protections.” The Complaint follows yesterday’s similar charges, including several alleged securities law violations, against…

The Securities and Exchange Commission (SEC) yesterday proposed rule changes that would require climate-related disclosures in registration statements and periodic reports (the Proposed Rule). The Proposed Rule is similar to other disclosure frameworks including the recommendations of the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol. This bulletin summarizes key, high-level details of the Proposed Rule, which is over 500 pages in length: Required climate-related disclosure. The Proposed Rule would require registrants to disclose: the oversight and governance of climate-related risks by the board and management; how any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short-, medium-, or long-term; how any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook; the registrant’s processes for identifying, assessing, and managing climate-related risks and whether any such processes are integrated into the registrant’s overall risk and management system or processes; the impact of climate-related events and transition activities on the line items of a registrant’s consolidated financial statements, and disclosure of financial estimates and assumptions impacted by such climate-related events and transition activities; Scope 1 and 2 emissions and Scope 3 emissions in specific circumstances; carbon offsets and renewable energy credits or certificates (RECs); any internal carbon price; and any climate-related targets, goals, and transition plans. Scope 1, 2, and 3 emissions. The Proposed Rule would require the disclosure of a registrant’s Scope 1 and 2 emissions in disaggregated constituent GHGs and in the aggregate, as well as in absolute and intensity terms. Scope 3 emissions and intensity would be disclosable only if material or where a registrant has set a GHG emissions target or goal that includes Scope 3 emissions. The SEC notes that the…