Key Takeaways:
- The SEC sent Coinbase a Wells notification alerting it to possible violations of US securities law.
- The company stated that elements of Coinbase’s spot market as well as its Earn, Prime, and Wallet products would be covered by any prospective legal proceedings.
- The business or person receiving a Wells Notice is informed that the commission intends to take enforcement action against them.
Coinbase revealed it had received a Wells Notice from the Securities and Exchange Commission, a document that the agency employs to alert companies to impending enforcement actions.
Additionally, the notice relates to suspected breaches of federal securities laws, including the Securities Exchange Act of 1934, and the filing states that the Staff has informed the Company that it has “preliminarily determined” to propose that the SEC bring a lawsuit against the Company.
According to a blog post by Coinbase, the “legal threat” may be directed at the exchange’s Coinbase Earn staking program, listed digital assets, its wallet, or Coinbase Prime services.
As a consequence, Coinbase shares dropped by almost 12% in after-hours trading on Wednesday, on top of a loss of 8.16% during regular trading.
Recently, Coinbase requested that the SEC reconsider whether staking services should be treated similarly to securities in an appeal to the SEC.
For the past few weeks, the Securities and Exchange Commission (SEC) of the United States has been aggressively participating in the cryptocurrency market.
Notably, Coinbase is not the only cryptocurrency exchange that the SEC has contacted about staking services. Kraken agreed last month to close down its cryptocurrency staking service in the United States. The platform additionally paid $30 million in penalty.
Paul Grewal, an attorney for Coinbase, continued, “We are very confident in the way we run our business,” while denouncing the SEC for allegedly missing transparency and its oversight of cryptocurrency exchanges as a whole for inadequate direction as well as clarity.
The crypto platform pointed out that it neither lists securities tokens nor makes any goods that are regarded as securities available on its platform. Additionally, Coinbase stated that the firm repeatedly welcomed the SEC to pose any inquiries about any asset at all on the platform and that the securities authority “raised none.”
Coinbase claims it made an effort to support the fairness of its listing procedure by stating that it has a “rigorous asset review process” that has discarded more than 90% of the assets that have applied to be listed on the platform, and that hundreds of assets have been dismissed because they might be securities.
