Coinbase could face SEC enforcement action for ‘potential violations of securities law’

Cryptocurrency exchange Coinbase said it received a Wells notice from the U.S. Securities and Exchange Commission advising regulators to take enforcement action.

In a March 22 blog post, Coinbase Said A “legal threat” could target Coinbase Earn, the exchange’s staking program. a listed digital asset; its wallet; or the Coinbase Prime service. Wells’ notices typically warn companies that the SEC may be subject to enforcement action, but Coinbase has not provided details other than “potential securities law violations.”

“We specifically asked the SEC to identify which assets on the platform were believed to be securities, but the SEC refused,” said Paul Grewal, Chief Legal Officer of Coinbase. said. “Today’s Wells notice comes after Coinbase filed multiple registration proposals with the SEC over several months, but the SEC ultimately declined to comply with all proposals.”

1/ Today Coinbase received a Wells notice from the SEC focusing on staking and asset listings. Wells notices generally precede enforcement actions.

— Brian Armstrong (@brian_armstrong) March 22, 2023

The cryptocurrency exchange said its products and services would “continue to operate as normal” pending the investigation. Grewal refuted the approach often cited by SEC Chairman Gary Gensler, namely, “come to us and talk”, saying that Coinbase met with SEC representatives “more than 30 times in nine months,” but that He claimed that he received little feedback on his proposal. .

“At no time during this investigation did the SEC communicate to us a single specific concern regarding a single asset on our platform. is also abnormal.”

Related: Coinbase Staking Is ‘Fundamentally Different’ From Kraken’s — Lead Lawyer

Coinbase filed a petition with the SEC on March 20, explaining to regulators that staking may not necessarily be universally considered security. The exchange says none of its listed assets are considered securities under regulatory authority, and its wallet’s potential targets are based on the SEC’s “misunderstanding of crypto products, assets, and services.” claimed.

The SEC had previously announced a settlement with Kraken, where the cryptocurrency exchange agreed to suspend its staking program for U.S. users. It also followed up by announcing a lawsuit against Justin Sun and several celebrities over the offering, sale and promotion of BTT).

Related: Power On… SEC Makes Reactionary Move Against Crypto Lending