The U.S. Securities and Exchange Commission (SEC) has sent Coinbase a “Wells notice” regarding possible securities law violations. The Nasdaq-listed cryptocurrency exchange noted that, contrary to what SEC Chairman Gary Gensler said, securities regulators “do not let crypto companies ‘come in and register. Coinbase CEO Brian Armstrong explained: “Wells notices usually precede enforcement actions.”
Coinbase Receives “Wells Notice” from SEC
Cryptocurrency exchange Coinbase (Nasdaq: COIN) received a “Wells Notice” from the U.S. Securities and Exchange Commission (SEC) on Wednesday, stating that “an unspecified portion of our listed digital assets, our staking services Coinbase Earn, Coinbase Prime and Coinbase Wallet announced that it has received a Wells notice “after a cursory review of the following.”
Coinbase elaborates in a blog post:
Today’s Wells notice does not provide much information for us to respond to; the SEC staff says it has identified possible securities law violations, but nothing more.
“We specifically asked the SEC to identify which assets on our platform they believe may be securities, but they refused,” the exchange clarified.
“Wells notices typically precede enforcement actions,” Coinbase CEO Brian Armstrong said on Twitter.” Two years ago, the SEC took a close look at our business and approved Coinbase’s IPO. Our S1 (filing) clearly explained our asset listing process and included 57 references to staking,” the executive explained.
SEC Chairman Gary Gensler often urged crypto companies to come and register with the securities watchdog. But Coinbase noted on Wednesday:
The SEC does not allow crypto companies to “enter and register” – they tried.
emphasized that the Nasdaq-listed crypto platform does not list any securities tokens or offer products on its platform that would be considered securities. In addition, the company “repeatedly invited the SEC to raise any and all questions regarding any assets on our platform,” Coinbase said, adding that the securities regulator “did not raise any.”
The exchange made it clear: “We met with the SEC over 30 times in nine months, and all we talked about was us.”
Coinbase has a rigorous process to analyze and review each digital asset before it is made available on the exchange, shared in detail with the SEC as part of our listing,” and the Exchange concluded:
The conclusion remains the same: Coinbase does not list securities or offer products that are securities to customers.
In February, the SEC took action against crypto exchange Kraken over its staking program. The cryptocurrency exchange paid $30 million to settle with securities regulators and halted its program for U.S. users.