The US Securities and Exchange Commission (SEC) has launched an investigation into whether Coinbase let customers trade digital assets that should have been registered as securities, according to Bloomberg.

The SEC has stepped up scrutiny of the issue since Coinbase began ramping up the number of tokens on its platform, says Bloomberg, citing several sources.

The investigation predates an insider trading tipping case involving a former Coinbase product manager which saw charges brought last week. The ex-employee was one of three people to be charged by the DoJ and the SEC.

However, while the DoJ charges did not mention securities, the separate SEC charges did. Of the 25 crypto assets that the defendants allegedly purchased with insider information, "at least nine" were securities, said a statement from the watchdog.

This provoked a forceful response from Coinbase chief legal officer Paul Grewal who posted a blog entitled: "Coinbase does not list securities. End of story."

The new investigation marks the latest development in a long-running tussle between regulators and crypto exchanges over what constitute securities.

The SEC is involved in a lawsuit with Ripple over whether XRP is a security, while Coinbase itself was forced last year to ditch a planned interest-earning product after the watchdog said it considered it to involve a security.

At the time, Coinbase CEO Brian Armstrong accused the SEC of some "really sketchy behavior".