The United States Securities and Exchange Commission (SEC) has sent the crypto exchange Coinbase a “Wells notice” about possible violations of securities laws. The Nasdaq-listed platform noted that this is not the same as what the SEC did. Chairman Gary Gensler was also mentioned, he said that the regulator will not let crypto companies ‘come in and register.’ Coinbase CEO Brian Armstrong remarked that “A Wells notice typically precedes an enforcement action.”
Coinbase Obtains a ‘Wells Notice’ From SEC
Cryptocurrency exchange Coinbase (Nasdaq: COIN (announcement) stated on Wednesday that it has been given a “Wells notice” by the U.S. Securities and Exchange Commission (SEC) “in regards to possible violations of securities laws regarding an unspecified portion of our listed digital assets, our staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet following a cursory investigation.”
Coinbase detailed in a blog post:
Today’s Wells Notice does not provide us with a lot of information to help us respond. The SEC staff said that they have not identified any violations of securities law.
“We have asked the SEC to specify which assets on our platforms they believe may be securities, and they declined to do so,” the exchange clarified. “A Wells notice typically precedes an enforcement action,” Coinbase CEO Brian Armstrong noted on Twitter. “Two years ago the SEC looked into our business in detail and approved Coinbase to go public. Our S1 [filing] clearly explains our asset listing process and includes 57 references to staking,” the executive pointed out.
SEC Chairman Gary Gensler has encouraged crypto companies to register with the securities watchdog on several occasions. However, Coinbase stated Wednesday:
The SEC will not let crypto companies ‘come in and register’ — we have tried.
The Nasdaq-listed crypto platform noted that it does not list securities tokens and does not provide securities products. Additionally, the company has “repeatedly invited the SEC to raise any questions about any asset at all on our platform,” Coinbase added that the securities regulator “raised none.”
The exchange revealed: “We had more than 30 meetings with the SEC over nine months, but we were doing all of the talking.”
Noting that “Coinbase has a rigorous process to analyze and review each digital asset prior to making it available on our exchange — a process that we shared with the SEC in detail as part of our public listing,” the exchange concluded:
The bottom line: Coinbase does not list securities, nor offer products to customers that are securities.
In February, the SEC took action against cryptocurrency exchange Kraken over its staking process. The cryptocurrency exchange settled with the securities regulator for $30 million and closed the program to U.S. users.
What do you think about the SEC sending Coinbase a Wells Notice about potential violations of securities laws? Please let us know by commenting below.
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