Regulator’s comment letter highlights potential enforcement action
- SEC takes action against Marathon Digital for using non-GAAP measures in crypto accounting
- Coinbase likely to face regulatory enforcement action for similar practice
- New accounting rule from FASB changes accounting and disclosure for crypto assets
- Companies can now capture the most recent value of crypto assets
- Coinbase used tailored accounting by stripping out crypto-impairment costs
- SEC warns against individually tailored non-GAAP measures in crypto accounting
The Securities and Exchange Commission (SEC) has taken action against Marathon Digital for using non-GAAP measures in its crypto accounting, raising concerns that Coinbase may also face regulatory enforcement. The SEC’s comment letter to Marathon Digital stated that the use of individually tailored non-GAAP measures, which exclude the impact of a new accounting rule for crypto assets, is not compliant with regulations. Coinbase had adopted a similar practice when it opted for early adoption of the new rule. The rule, which changes the accounting and disclosure for crypto assets, allows companies to capture the most recent value of these assets. However, using tailored accounting by stripping out crypto-impairment costs and fair-value volatility may violate regulations. The SEC’s warning to Marathon Digital suggests that Coinbase should refrain from using individually tailored non-GAAP measures in its crypto accounting.·
Factuality Level: 3
Factuality Justification: The article provides relevant information about Coinbase potentially facing regulatory action over its accounting for crypto assets. It includes details about the SEC’s actions against another company for similar practices, the new accounting rule from the FASB, and the implications for companies holding crypto assets. However, the article contains unnecessary background information, repetitive details, and some tangential information that could have been omitted to focus on the main topic.·
Noise Level: 3
Noise Justification: The article provides a detailed analysis of regulatory actions against companies like Coinbase for their accounting practices related to crypto assets. It includes insights from experts and references specific SEC comment letters to support its claims. The article stays on topic and does not dive into unrelated territories. However, it could benefit from more data and evidence to further strengthen its arguments.·
Public Companies: Coinbase Global Inc. (COIN), Marathon Digital Holdings Inc. (MARA), MicroStrategy Inc. (MSTR), Tesla Inc. (TSLA), Amazon.com Inc. (AMZN), Bit Digital Inc. (BTBT)
Key People: Olga Usvyatsky (former vice president for research at Audit Analytics and author of Deep Quarry), Francine McKenna (author of the Dig on Substack and a former journalist and academic)
Financial Relevance: Yes
Financial Markets Impacted: The article pertains to the regulatory enforcement action against Coinbase Global Inc. for its accounting practices regarding crypto assets. This can impact the financial markets, particularly the cryptocurrency market and companies involved in crypto assets.
Financial Rating Justification: The article discusses the regulatory action taken by the Securities and Exchange Commission against Coinbase Global Inc. for its accounting practices related to crypto assets. This can have implications for the financial markets, especially the cryptocurrency market, as it highlights the importance of proper accounting and disclosure practices for companies dealing with crypto assets.·
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.·
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