The SEC doesn’t consider a firm’s business model when it goes public. The SEC does make sure that they’re making the necessary disclosures and providing audited

The SEC doesn’t consider a firm’s business model when it goes public. The SEC does make sure that they’re making the necessary disclosures and providing audited financial statements. The initial registration form is Form S-1. One of the things you disclose in Form S-1 is the risks your firm faces that may affect its valuation. Coinbase disclosed the following risks in their Form S-1 SEC filing [0]: > We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition. > A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, and our business, operating results, and financial condition may be adversely affected. > As we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be subject to investigations and enforcement actions by regulators and governmental authorities. Coinbase was acutely aware of the risk that their business may not exactly be legal, they disclosed it in their initial SEC filing. It’s not the SEC’s job to tell Coinbase that what they’re doing might not be legal, it’s up to Coinbase to hire lawyers to advise them. [0] https://www.sec.gov/Archives/edgar/data/1679788/000162828021003168/coinbaseglobalincs-1.htm https://www.sec.gov/Archives/edgar/data/1679788/000162828021...