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The United States Securities and Exchange Commission (SEC) has served Coinbase with a Wells Notice. The exchange firmly believes that it is in the right and appears frustrated at the regulator’s lack of clarity.
Coinbase has become the next major exchange to receive a Wells Notice from the United States Securities and Exchange Commission (SEC). The exchange published a post saying that it had requested the SEC to publish some clarifications about rules, only to be served with a legal notice.
Coinbase does not hide that it had received a legal notice when it was trying to receive information on how to ensure it was doing everything right. The Wells Notice was handed in relation “to an undefined portion of our listed digital assets,” Coinbase Earn, Coinbase Prime, and Coinbase Wallet.
The exchange will continue to offer these services, as there is no mandate that it suspend or halt any of them. A Wells Notice is not a formal charge but informs a company that the SEC recommends taking action for a possible violation of securities laws. Coinbase notes that it had made multiple requests regarding registration, saying,
“Today’s Wells notice does not provide a lot of information for us to respond to…We asked the SEC specifically to identify which assets on our platforms they believe may be securities, and they declined to do so. Today’s Wells notice also comes after Coinbase provided multiple proposals to the SEC about registration over the course of months, all of which the SEC ultimately refused to respond to.”
The exchange is confident that it can handle any legal issues and that it can prove that “the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets,” should it come to that.
Brian Armstrong Believes Exchange Is in the Right
Coinbase CEO Brian Armstrong also spoke of the development on Twitter, saying that a Wells Notice precedes enforcement action. He notes that the SEC reviewed the business and approved the exchange to go public. He is confident that Coinbase is in the right, though he concedes that such developments are “part of the journey to reforming our financial system.”
Armstrong also says that the legal process will make it clear that the SEC has not been fair or reasonable. The CEO has proven resistant to what he considers unfair enforcement of regulatory action, and it continues here.
Coinbase Execs Express Frustration Over Unproductive SEC Talks
Coinbase’s Chief Legal Officer Paul Grewal also expressed disappointment about the notice. He reveals that the exchange had met with the SEC over 30 times in the past nine months. Grewal added that Coinbase has tried to work with the agency only to receive no feedback.
The Coinbase stock has taken a hit following the notice, down about 8% over the past day. This is perhaps a knee-jerk reaction to the news, as Coinbase is confident that it can handle any action.
In other news, the SEC has also sued Justin Sun for unregistered securities offerings. It clearly indicates that the agency is going after major players in the space.