- SEC Issued a Wells Notice to Coinbase on Wednesday.
- Coinbase Chief Legal Officer Paul Grewal’s statement.
- Coinbase Stock price dropped more than 10% during extended hours.
Coinbase Global Inc (NASDAQ:COIN) saw its stock price take a dive of over 10% after it was sent a Wells Notice by the U.S. Securities and Exchange Commission (SEC). This notice often signals that the agency intends to press charges.
What we know
The Wells Notice, however, does not provide enough information to determine the potential violations. Therefore, Coinbase will continue to carry on with its business as usual.
The company believes that these enforcement actions could relate to certain aspects of the Company’s spot market, staking service Coinbase Earn, Coinbase Prime?, and Coinbase Wallet.
The news of SEC issuing the Wells Notice comes almost a month after the agency issued a similar notice to Paxos (blockchain infrastructure platform).
Comment from Coinbase’s Chief Legal Officer Paul Grewal
Coinbase had just reported its financial results for fourth quarter, which exceeded Wall Street expectations. On Wednesday, its Chief Legal Officer Paul Grewal made it clear that the company does not list securities.
Given the chance, we would welcome a legal process to provide the clarity we have been advocating for and to prove that the SEC has not been fair when it comes to digital assets.
Grewal also stated that Coinbase Earn is very different from the staking service that the SEC had to ban at Kraken last month. Coinbase shares have risen 100% since the start of the year.