While providing few information, Coinbase claims the SEC alerted the business of its intentions to take enforcement action against the exchange and its staking services.
In connection with its listing of suspected unregistered securities, cryptocurrency exchange Coinbase (COIN) may soon be subject to an enforcement action, the business stated on Wednesday.
In the course of operating its exchange and staking services, Coinbase allegedly broke securities laws, according to the SEC’s allegations. In order to target Coinbase, the regulator issued what is known as a “Wells notice,” which alerts the company that the agency is preparing to take action in the future, which could include issuing an injunction or a cease-and-desist order, without revealing precisely what it found to be in violation.
The chief legal officer of Coinbase, Paul Grewal, said in a statement, “If a legal process is required, we welcome it to offer the clarity we have been calling for and to establish that the SEC simply has not been fair or reasonable in its engagement on digital assets.” “Till then, business will continue as usual.”
In a filing with the SEC, Coinbase cited its interactions with the agency’s employees and stated that it believed these prospective enforcement actions would pertain to elements of the company’s spot market, staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet.
The notice is only preliminary, and cautions like this don’t always result in legal action. The corporation has until March 29 to notify the agency of its intention to contest the enforcement division of the SEC’s determination that there have likely been violations of securities law.
Coinbase additionally stated that the notice did not pertain to their digital asset listing procedure in a blog post published on Wednesday.
On Wednesday, Brian Armstrong, the CEO of Coinbase, tweeted as well about the Wells notification.
1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.
— Brian Armstrong (@brian_armstrong) March 22, 2023
An individual with knowledge of the situation told CoinDesk that the exchange had over 60 meetings with the federal regulator regarding the listing and registration of digital assets, but that the agency had refused to provide any guidance or responses. Determining the ideal market structure and selecting the assets that may be listed were among the topics covered in the discussion.
Coinbase has openly challenged the SEC for what it sees as a nebulous regulatory framework and asked the commission to clarify how digital assets might fall under securities rules in a petition to the regulator in July.
SEC Chair Gary Gensler, on the other hand, has stated repeatedly that he thinks cryptocurrency exchanges, specifically Coinbase, are operating as unregistered securities exchanges in the United States. Gensler cites the volume of tokens they list and claims the vast majority of these resemble securities.
Following the publication of the information on Wednesday, shares of Coinbase fell by more than 11% after hours.
The Wells warning was sent on Wednesday, the same day that Justin Sun, the founder of Tron, was sued by the SEC over claims that the TRX and BTT tokens are unregistered securities (among other charges).
Coinbase is a popular digital currency exchange platform that allows users to buy, sell, and store cryptocurrencies such as Bitcoin, Ethereum, and Litecoin. Founded in 2012, Coinbase has become one of the most trusted and widely used platforms for buying and selling cryptocurrencies, with over 68 million registered users across more than 100 countries.
Coinbase offers several features to its users, including a user-friendly interface, mobile app, and secure storage of digital assets. It also provides a range of services such as cryptocurrency trading, wallet storage, and merchant payment processing.
In addition to its core exchange services, Coinbase also offers a variety of educational resources and tools to help users learn about cryptocurrencies and blockchain technology. This includes a blog, news updates, and a Coinbase Earn program, which allows users to earn free cryptocurrency by completing educational tasks.
Coinbase has received significant investment from major venture capital firms and has partnerships with a variety of major companies, including PayPal and Visa. It is regulated by various government agencies in the countries where it operates, including the US Securities and Exchange Commission (SEC) and the UK’s Financial Conduct Authority (FCA).
