The US Securities and Exchange Commission (SEC) has sent Coinbase a “Wells notice” about potential securities law violations. The Nasdaq-listed cryptocurrency exchange noted that, contrary to what SEC Chairman Gary Gensler said, the securities regulator “will not allow cryptocurrency companies to ‘come in and register’.” Coinbase CEO Brian Armstrong explained: “A notice from Wells typically precedes an enforcement action.”
Coinbase Receives ‘Wells Notice’ From SEC
Cryptocurrency exchange Coinbase (Nasdaq: COIN) announced Wednesday that it has received a “Wells notice” from the US Securities and Exchange Commission (SEC) “regarding an unspecified portion of our listed digital assets, our Coinbase Earn, Coinbase Prime and Coinbase Wallet staking service after cursory investigation.”
Coinbase detailed in a blog post:
Today’s notice from Wells does not provide much information for us to respond to. SEC staff told us they have identified potential securities law violations, but little else.
“We specifically asked the SEC to identify which assets on our platforms they believe may be securities, and they declined to do so,” the exchange revealed.
“A notice from Wells generally precedes an enforcement action,” Coinbase CEO Brian Armstrong said on Twitter. “Two years ago, the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 (presentation) clearly explained our asset listing process and included 57 references to participation,” the executive described.
SEC Chairman Gary Gensler often urged crypto companies to come in and register with the securities watchdog. However, Coinbase noted on Wednesday:
The SEC won’t let cryptocurrency companies “go in and sign up,” we tried.
The Nasdaq-listed crypto platform emphasized that it does not list security tokens or offer any products that are considered securities on its platform. Furthermore, the company has “repeatedly invited the SEC to raise any questions about any asset on our platform,” Coinbase said, adding that the securities regulator “did not raise any.”
The exchange revealed: “We met with the SEC more than 30 times over nine months, but we were the only ones talking.”
Noting that “Coinbase has a rigorous process for analyzing and reviewing each digital asset before making it available on our exchange, a process that we share in detail with the SEC as part of our public listing,” the exchange concluded:
The bottom line remains: Coinbase does not list securities or offer products to our customers that are securities.
In February, the SEC took action against crypto exchange Kraken for its staking program. The cryptocurrency exchange paid $30 million to settle with the securities regulator and shut down the program for US users.
What do you think about the SEC sending Coinbase a notice from Wells about potential securities law violations? Let us know in the comments section.
image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
